Using Your IRA Money To Fund Real Estate Investments


For many of you, investing in your 401k or IRA seems like a solid option to help you grow money all the way up until retirement. You put money aside each paycheck, don't touch it until you retire, and hope you have enough to last through your retirement years.

Did you know that you can use the money you've already set aside in a 401k or IRA account to invest in real estate?

But Mike, why would I want to do that?

There are a few reasons why some are interested in doing so:

  • What if you outlive the money you have saved? I would hope you plan to live a long, fulfilling, retirement! By investing in real estate, you can put money into an asset that will spin off cashflow each month during your retirement years and GROW through your retirement years. For most IRA's, the plan is to pull 4% of your account each year after you retire and hope you have enough. 
  • When you factor in the multiple benefits of owning real estate as it relates to cashflow, appreciation, all while having tenants pay off your mortgage, I think you'll see returns that can outpace what you have in a typically mutual funds (I'm not a financial advisor, yet I'm happy to dig deeper and show you the numbers). Do you think 6-12% returns are nice? What about 20%, 30%, or 40% returns? Would that excite you a bit more?
  • Real Estate is a tangible, physical asset. You can touch it. You can go look at it. Many investors love that it's a physical thing vs a piece of paper or something else less tangible.
  • Control: You pick the properties and the people you work with. You don't have to worry about some corporate scandal from upper level management dictating the stock price in your investment and ruining your returns on stocks and mutual funds.
  • Liquidity: Since you're already planning on not seeing this money until you retire, you're not worried about liquidity at this point. It won't affect your emergency funds or short-term savings.

How can I take money from a 401k and use it in real estate? The key here is what's called a self-directed IRA. This IRA follows all the same rules as other IRA's, yet it allows you to pick the asset classes you're investing in. A company helps to keep up the paperwork so that IRS is happy, and you're all set.

One note: If you're currently working for an employer, it's not likely you're eligible to flip your active 401k into a self-directed IRA. This is more meant for funds with past employers or other IRA accounts you have set up.

We've worked with investors to set up a self-directed IRA and helped them buy real estate. You can do this! Your future "you" will thank you for learning about this opportunity.

Want to learn more? Check out this link with a company that facilitates self-directed IRA's along with investors we work with on our holding company (called Elite Advantage Properties):


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