Have you ever wondered how to make millions of dollars without being heavily taxed? Have you ever wondered how Mitt Romney and so many others like him have made millions of dollars in their IRAs and 401(k)s, all of which experiences significant tax benefits? Have you ever thought that his is something that would be extremely enjoyable or nice to have, but that it will probably never work for you? Whatever your thoughts have been you are probably right.
Many books out there that teach individuals how to become rich are more about learning how to think rather than what exactly to do. This is because in order to become wealthy you need to develop the right mentality or thinking that will lead to true success. Learning to take advantage of the tax strategies that are out there is one of the first things to becoming right.
Investing in real estate has made more millionaires than any other investment category you can get into. Real estate IRAs are set up for the purpose of turning over the investment decision making into the control of the account holder. If this account is set up as a Roth IRA then the funds will never be taxed and only be pulled out for retirement purposes by the retiree, not the government.
What is Wholesaling Real Estate?
If you think about wholesaling, it is essentially buying and selling in bulk quantities only to turn around and sell in bulk quantities again. For example, a wholesaler may buy from a manufacturer and then sell in large quantities to the retailers. Well, wholesaling real estate is essentially the same thing.
There are many auctions, foreclosures, and many other methods for buying real estate at a big discount. Many people, however, are unaware of or don’t know how to take advantage of these markets. Most of the time, however, these homes need some additional work that needs to be done before the home in move-in ready. Banks won’t lend or issue a mortgage until these homes are move-in ready. So contractors will often buy these types of homes, fix them up, and then resale them to make a profit. But again, they often don’t know about, understand, or want to take advantage of these markets.
This is where you opportunity comes into play. If you can take advantage of the auctions or other motivated sellers and then, after getting the deal under contract, turn around and resell the deal for $5,000 to $10,000 you make a healthy profit without losing any money or even putting very much money on the line.
Now think of it this way, you have a good job or some sort of steady income, so you don’t need the profits from wholesaling houses. So you set up a real estate IRA that owns an LLC. You the take that property and write the contract and complete the entire deal under the name of the IRA LLC. Now you have just made $5,000 to $10,000 profit with your IRA that will never be taxed, assuming it is a Roth IRA (if will be tax differed if it is a traditional IRA). Now we can see how you can make money very quickly, all of which is tax free.