Investing with Hedge Fund or 401 K? Should you or Shouldn't you?

Homes are being purchase in creative ways such as Hedge funds or perhaps developing an LLC from your 401 K .

We have recently heard about hedge fund companies purchasing homes in bulk. What exactly is a hedge fund?  According to the website http://www.magnum.com/hedgefunds/abouthedgefunds.asp

      A Hedge fund is a fund that can take both long and short positions, use arbitrage, buy and sell undervalued securities, trade options or bonds, and invest in almost any opportunity in any market where it foresees impressive gains at reduced risk. Hedge fund strategies vary enormously -- many hedge against downturns in the markets -- especially important today with volatility and anticipation of corrections in overheated stock markets. The primary aim of most hedge funds is to reduce volatility and risk while attempting to preserve capital and deliver positive returns under all market conditions.

 This is a group of  investors who have some together and purchased homes in bulk. The homes are renovated and then sold. Like investors they have a system in place to ensure profit if made.

Taking money from your 401 K and investing in properties is another investment opportunity.  Great idea? Be careful of the pitfalls with fees.   According to CNN Money the website http://money.cnn.com/magazines/moneymag/money101/lesson23/index.htm.

Loans must be repaid with after-tax money plus interest. And, with few exceptions, if you withdraw money before age 59-1/2 you must pay income taxes plus a 10% penalty. What's more, lost time for compounding will substantially shrink your nest egg.

With any investment it is wise to contact a financial adviser as well as a certified accountant for further requirements or fees. 

Purchasing a HUD home or Short Sale may offer better pricing.  Homes that need some renovations would allow the investor to hire a General Contractor offering the new homeowner a chance to make it their own style. Choosing to make the home current using a certified renovation General Contractor will help the process run smooth. 

Knipp Contracting 623-561-0803

Follow us on Twitter @knippcontract  or find on on Facebook 

sales@knippcontracting.com