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How We Paid Cash for a Rental House

We paid cash!

A testimony from Jackie

We are determined to pay cash for everything — even big ticket items. So while my husband and I were getting completely out of debt, I set another long-term goal: to pay cash for a rental house once we were debt-free.

The plan was to buy the rental property within a self-directed IRA. (That’s a type of retirement account where you’re allowed to decide what you want to invest in, so long as you stay within the IRS rules.)

Small amounts add up:

I started contributing to my 401k at work. At first I just contributed 3% to see what my check would be like with that amount gone. Once I adjusted to that change, I increased my contribution by 1-2% every few months. I kept that pattern up until eventually I was contributing 30% of my check!

I invested in the options available to me in the 401k, and also got a very small company match. I had in mind that I would be quitting my job at some point in the (then-distant) future to go and work for myself. Once I did, my plan was to roll the 401k money into a self-directed IRA and then buy a rental house within it. The IRA would own the rental property on my behalf.

But before I could do that, the company I worked for was acquired. That meant I could roll the money over to a self-directed IRA earlier than I’d expected. I went ahead and did exactly that. Then I went house shopping!

Finding the house:

I had managed to save up about $80,000 over about 7 years, so I set my rental property budget at $50,000 or less. (I wanted to have extra cash available for repairs and unexpected expenses.)

In order to find a house for that low price, I had to look outside of our area. I found an older home listed at around $40,000 in a small town about 40 miles away. I had my IRA make a full-price cash offer, sight unseen, that was contingent upon inspection. (The property was occupied, and they didn’t want people inspecting who weren’t serious.)

After inspection, I had my IRA withdraw the offer. The house needed a LOT of work. I got a few estimates, and then had my IRA make a new offer at about half the asking price due to the repairs that would be needed. They accepted. Suddenly my IRA owned a rental property, and I’d paid cash for a house.


How it feels to pay cash:

The first time you make a large purchase with cash is amazing! So is every time after that!

Living a debt free life may not be considered “normal”, but it’s awesome — and something I believe everyone can do once they get their finances into shape.

We’re regular people who struggled with debt for years, and we finally beat it. You can too!

Jackie Beck is an entrepreneur and the mom of one college-age son. Her husband is a software tester and avid reader. You can read about how they paid off over $147,000 in debt at

Have you saved up and paid cash for something — large or small? Submit your story for possible publication here.

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  • Rachel says:

    I agree! Paying cash for our $21,000 minivan felt SO good! A few years ago, I wouldn’t have thought it was possible to pay cash for such a large purchase. But it is! Next goal: paying off our mortgage!

  • amy says:

    What company did you use for the self-directed IRA? I’ve looked into this but the fees were huge and the minimum was much greater than $80,000.

  • amy h. says:

    Were you able to pay for the repairs through the IRA?

    • Jackie says:

      Yes, in fact you have to do so. The IRS has a lot of rules around self-directed IRAs and you’ve got to be sure to follow them. That’s why I wanted to be sure to have enough left for repairs. You can also use contributions to do things like, but of course your contributions to an IRA are limited annually.

  • Sarah says:

    That is fantastic and hilarious all at the same time. I live in Maine and you can barely get a trailer on no land for that kind of money!

  • amy says:

    An IRA has to be in one person’s name. Is it just you who owns the IRA/house and not your husband? Also, many people put rental property in an LLC/partnership to protect their other assets. Why wasn’t this done?

    • Jackie says:

      Yes, it’s just me who owns the IRA. There are definitely tax & other implications of buying a house through an IRA that people should look into if they’re thinking of doing something similar.

      If I had wanted to go the checkbook IRA route, I could have bought the house within an LLC and then had the IRA own the LLC, but I had concerns about doing that. In Arizona IRAs have more protection from judgment than in many other states.

  • Cris says:

    You said that the path to financial freedom cannot seem normal, and hubby and I are following that path. It feels great but sometimes lonely as just a couple of friends have the same mindset. Any suggestions? TIA

    • Jackie says:

      I would hang out with those particular friends more, and read the blogs of people who are doing the same. You can join my FB group too if you like. When we were getting out of debt I talked about it with everyone, and more people than I would have guessed at least wanted to be doing the same. As you make more progress they may get more interested too.

  • Sheila says:

    Do you have any suggestions for learning about self-directed IRA’s? My husband and I are intrigued. I see you mentioned Arizona in a previous comment. We live in Arizona, so anything specific to AZ would apply to us. Thanks!

    • Jackie says:

      I basically just did a lot of Googling back when I was first considering it, plus searching the IRS website to make sure I understood the prohibited transactions. If you have a financial or tax person you may want to check with them too, as it’s definitely not for everyone. When buying within an IRA like this, the custodian has to sign everything and write out all the checks, etc. so it’s a more complicated process than just buying real estate yourself. If you’re easily frustrated I wouldn’t recommend it 🙂

  • Do you receive the rent in the IRA or in your pocket? Are months with no renters a problem (other than missed cash flow?)

    • Jackie says:

      The rent is made out to the IRA and goes to it. It’s considered investment/dividend income from the property. Luckily, so far I haven’t had any months without renters, but even if I did since the money goes directly to the IRA it’s not a part of my cash flow.

  • Tre says:

    I would never have thought of using an IRA like that. Have you bought more than one rental property through the IRA?

  • chantel says:

    Exactly what my husband and I did! We bought one rental house with my husband’s IRA, which we later sold, for a profit, and bought 2 more rentals houses, which both needed work. We are now in the process of renting out both but will most likely sell at least one, again for a profit, and buy 2 others. As long as you keep your IRA home $, including rental income, completely separate from your personal income, it is a great way to stock up for retirement. (We have a completely different bank account that our rental money goes into each month.) Another option for buying houses is auction sites!! My husband and I have bought multiple houses on auction sites for MUCH less than what we would have paid through another route . Most likely the really good deals are houses that you can’t get traditional financing for due to major repairs needed. As long as you have enough cash in your IRA to pay for those repairs, the profits are enormous. While we aren’t professional house “flippers, ” if we are doubling our initial investment each time, the $ adds up quickly. We are also in a high -cost -of-living area but have been able to find cheap houses on and Williams and Williams site. You would be surprised at the houses that are available in almost any area. We are currently living in a house that we bought at a Williams and Williams auction 5 years ago and will make a huge profit on when we sell this summer. (NOT bought with our IRA.) Please note that you personally can not live in your IRA home. It has to be kept as a rental or as an investment.

  • Jennifer says:


    I had no idea I could roll over my 401k into a self-directed IRA. This is so encouraging. Owning a rental property is one of my dreams but it’s seemed so far out of possibility at this point that I haven’t even outlined any goals for getting there. But if I could rollover my 401k funds, it could be a possibility a lot sooner than I thought!

    Thanks for an inspirational post,


  • Allison says:

    Do property taxes have to be paid out of the IRA like repairs do?

    • Jackie says:

      Yes, everything related to the property has to be paid from the IRA, otherwise you could end up making a prohibited transaction. (There’s a long list of things that could be considered prohibited transactions…)

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