A retired police officer from Ohio, Jim S., always had an interest in real estate and dabbled in some investments over the years. As a police officer he had a state pension and for most of his life didn’t see a need for an IRA. After retiring, he worked a security job for a few years that offered a 401(k). Jim was only at the job for a short time and hadn’t accumulated much in the account, and thought there wasn’t much he could do with it.
After some research, Jim discovered self-directed retirement accounts and knew that even though his account balance was small, he could leverage some experiences he learned from his real estate investments to generate positive returns for his small 401(k).
One of those experiences, real estate options, often did not require a lot of up-front money for investments. Jim conducted more research and sought out more education on the topic. He then went out into local neighborhoods to find opportunities for real estate options– often focusing on distressed properties or motivated sellers.
In just a month, Jim found a motivated seller and negotiated a price for their house with a $100 assignable option contract. The $100 gave Jim the right to purchase the house at a certain price, within a certain time period. Jim was then able to find an investor, who regularly worked with distressed properties, to purchase the property for $1,900 more than his option contract price – this was 1,900% return on investment (ROI).
The option contract was purchased by Jim’s Equity Trust Roth IRA for $100 and $1,900 in profit was returned.
“I got the entire $1,900 that I sold my option for,” said Jim. “And because I am over 59½ and have had my Roth IRA for more than 5 years, my entire profit is tax-free – even if I took it out the next day.”
Want to hear more from Jim about his real estate option investment? You can, by listening to a webinar recording where he was featured discussing this deal and how real estate options work. Click here to listen to the webinar “Small Dollar Strategies with Big ROI”.