Self Directed 401k | Real Estate IRA LLC

Revenue Growth via Reinvesting | Three Homes

Here is an example of what your IRA or 401(k) can accomplish over a 12-year time frame. Let’s assume an IRA or 401(k) has a value of $450,000. And 3 homes are purchased for $140,000 each and then leased to produce income. Let’s also assume that the homes appreciate at the long-term national average of 4% per year.

Yr Beginning Value
Three $140,000
Homes
Gross Rent
Accumul
Taxes, Insurance,
and Maint.
Net Rent
Accumul
4% National
Appreciation
Year End Value
of IRA or 401(k)
1 $420,000 $36,000 $12,600 $23,400 $16,800 $460,200
2 $460,200 $36,000 $12,600 $23,400 $18,408 $502,008
3 $502,008 $36,000 $12,600 $23,400 $20,080 $545,488
4 $545,488 $36,000 $12,600 $23,400 $21,820 $590,708
5 $590,708 $36,000 $12,600 $23,400 $23,628 $637,736
6 $637,736 $36,000 $12,600 $23,400 $25,509 $686,645
7 $686,645 $36,000 $12,600 $23,400 $27,466 $737,511
8 $737,511 $36,000 $12,600 $23,400 $29,500 $790,411
9 $790,411 $36,000 $12,600 $23,400 $31,616 $845,427
10 $845,427 $36,000 $12,600 $23,400 $33,187 $902,644

Keep in mind that this is an extremely conservative approach since $30,000 of the original $450,000 is always on hand to handle maintenance, vacancy or management costs. The chart below illustrates the results.

Performance Summary

As you can see, this chart shows the growth of this self-directed IRA to over $1,000,000 in 12 years. Your area may appreciate at greater or less than 4% per year and your rents may be higher or lower than this example. Also note that we did not increase rents or taxes, insurance and maintenance.

Obviously rents would increase over time at least enough to keep up with inflation. Performances will vary and this is an example only.

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