How to Invest in Real Estate with your 401k

One of the really cool things that I didn’t know before investing in real estate is that we could do so from within our retirement accounts, like our 401Ks requires a couple of steps. Basically, it allows us to buy rental properties, do loans, or invest in larger, let’s say… Read more below

One of the really cool things that I didn’t know before investing in real estate is that we could do so from within our retirement accounts, like our 401Ks requires a couple of steps.
Basically, it allows us to buy rental properties, do loans, or invest in larger, let’s say commercial properties or apartment buildings and have an ownership stake. So, for someone who’s interested in let’s say, diversifying outside of the market, or rebalancing their portfolio, or even if you just wanted to invest in real estate, but you didn’t have the liquid cash to do it, but you had something in your retirement account, you could do it that way.

We’re moving money from a custodian (like Fidelity, Schwab, Vanguard, etc) into what’s called a self directed IRA.  Companies like Equity Trust that specialize in doing that and what you would do, I did this with, and when I left Microsoft and EA Sports, took the money from both of those retirement accounts and combined it and rolled it over into equity trust, which is one of the largest providers, they focus a lot on real estate investors. Another example of that is Provident Trust.

I’ll just give you some examples, rather than being limited to just stocks and bonds and mutual funds, you can do real estate, you can do limited liability companies, which could own a big commercial property, precious metals, promissory notes, so those types of alternative asset classes that, in my opinion, have a little bit more predictability and certainty of, let’s say, what the rents are going to be, what the loan pay down might look like, appreciation forecast, tax advantages that come along with that.

All the money that we might make, investing in real estate happens inside of our IRA, where we realize even more tax advantages. Our last deal investors made a little bit better than 20 percent. So that happens inside of their IRA, they grew their 100 to 120 in a year and then compounded and then compounded, you get the idea.

If you’re interested, what I would do is just encourage you to head over to either those resources I’ve personally been with both Equity Trust and Provident Trust in the past. Jump in there, poke around, see what makes the most sense for you.  Once that account is all set up, then you can say, hey, I want to take a look at some actual deals to invest those retirement dollars in and learn all about those, understand the risks, the rewards and be ready to close on a transaction.

Please let me know if you have any questions, comments, or feedback about investing and especially through our retirement accounts.

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