All Forum Posts by: Ernesto Barragan JR

Without knowing the IBS enough to give you detail on that I would either look at taking a loan on the 401k or just doing a cash out and pay the penalties. The Self directed is a great way to invest if you aren't worried about touching the money or being actively involved in the property in any way.

However I would not pull money out of the 401k until you are ready to buy and know which property you are going to buy. Talk to a lender and see what kind of timeline they will need with funds moving but you should be fine and 120k will be enough to get going leveraged.

Best of luck!

Gotcha! Thanks alot for the information anything helps,I appreciate you taking the time out.

1 Vote

Modesto/Merced, California

Quote from @Chris Davidson:

Quote from @Ernesto Barragan JR:

I have about 120k in my 401k and 100k in equity at the moment and would like to use it towards real estate investments. I've been researching different services to move my 401k money , such as Whole life Insurance or a self directed ira. How would you go about moving 401k money over and into what and whats your opinions on the concept of using whole life insurance as infinte banking?

Thank you!

If you are still working with the company you might be able to get a loan on against your 401k, and that would be the easiest option as you could do a BRRR and pay back the loan. If you aren't a self directed could be an option but with 120k you really are limited on acquiring properties, however could lend on rehabs. With Self directed getting loans is more difficult and you owe taxes on the leveraged portion, and is more complicated than I like. I just pulled out funds and payed the penalties early this year. While to some that was a bad move given how the market has performed this year vs my property I am ok with my decision.

For Infinite banking it sounds nice, but more complex and time consuming than just making money the ways I know. I like to keep things simple and easy; staying to what works for me.

ok I understand, with 120k I was under the impression that it would be enough to start off with one property and then brrr and so on. I don't plan on buying property and completely pay it off. So in my standing what would be the best approach in your opinion to aquire my first investment property?

0 Votes

Modesto/Merced, California

Quote from @John Perrings:

I do IBC myself and help others set it up in their lives every day. So I guess you could say I’m a big fan 🙂

Thats Awesome, would you advise I liquidate my 401k and pay taxes to set up a IBC policy? Have you helped anyone in similiar situations?

0 Votes

Modesto/Merced, California

Quote from @Dmitriy Fomichenko:

@Ernesto Barragan JR

It is not possible to take a loan from an IRA.

If you wish to invest using self-directed IRA - you don't need to withdraw the funds, you buy real estate inside of the IRA. IRA owns the property, not you.

Ok I understand now, how would the monthly cashflow of the property work? Would I keep the cash or does the cashflow of the property go right back in the self directed IRA?

0 Votes

Modesto/Merced, California

Quote from @Christophe Madell:

@Ernesto Barragan JR

Have you thought of private lenders?

Yes, I have thought of that. I have yet to do my first deal and not sure how comfortable I'd feel using a private lender on my first deal. What the typical interest rate you get with private lenders?

0 Votes

Modesto/Merced, California

Quote from @Steven Foster Wilson:

Quote from @Ernesto Barragan JR:

Thank you!

We moved my wife's into a self-directed IRA account. We have not used it yet because we would rather just do a refinance but it is always an option there.

If you do plan on using your self directed IRA do you loan yourself the money or are you liquidating the account when you withdraw?

0 Votes

Modesto/Merced, California

Quote from @John Perrings:

Quote from @Dmitriy Fomichenko:

@Ernesto Barragan JR

Be very careful with the whole life insurance. Don't simply rely on the illustration by the insurance agent. They typically make commissions equivalent to one year of your premium payments and have a vested interest selling the policy to you, they do not have your interest at heart. If you know how to invest your money - whole life insurance is a rip off (it might work for those who have no idea how to invest or are unwilling to learn, so the forced saving component of the whole life insurance would provide them with so me benefits at the very high cost).

Is the 401k with the current or past employer? If past - you are free to move that to a self-directed IRA. If current - you may not be able to access those funds at this time, contact your plan administrator and ask about "in-service distribution".

You won't be able to combine your IRA investments with your personal investments (regardless if you are using equity in your home or savings). You need to have two separate plans: investing your retirement dollars and separately from that making personal investments.

It's not an either/or discussion. Life insurance is just another asset class. That means it's not an investment and shouldn't be compared to an investment. Having both investments and insurance is completely reasonable as part of an overall strategy.

Just like having investments and real estate is completely reasonable.

Having both investments and insurance will generally create better distribution outcomes in the future than either one can do by themselves.

Whats your opinion on the concept of Infinite Banking through whole life insurance?

0 Votes

Modesto/Merced, California

Thank you!

2 Votes

Modesto/Merced, California

All Forum Posts by: Ernesto Barragan JR

Ernesto Barragan JR has started 5 posts and replied 18 times.

Post: Moving my 401k to use for Real Estate Investing?

Post: Moving my 401k to use for Real Estate Investing?

Post: Moving my 401k to use for Real Estate Investing?

Post: Moving my 401k to use for Real Estate Investing?

Post: Moving my 401k to use for Real Estate Investing?

Post: Moving my 401k to use for Real Estate Investing?

Post: Moving my 401k to use for Real Estate Investing?

Post: Moving my 401k to use for Real Estate Investing?