Buying Real Estate through Self-Directed 401k's and IRA's

By Patti Anderson

AZ Real Estate Broker

Can you Buy Real Estate using your 401k or IRA?

The U.S. Census Bureau estimates that by 2025, approximately 35 percent of the nation's population will be 50 or older, versus just 28 percent in 2000. With so many seniors getting out of the workforce, the subject of what to do with that old 401k and IRA has become a hot subject. 

Let’s admit it… investing our retirement money into the stock market is a pretty frustrating option these days. It’s unsettling watching our hard earned money dwindle with very little control or understanding why, on top of paying fees to someone else to do it. Ouch!

The good news is, you can legally self-direct your retirement funds AND get a pretty lucrative return by investing in real estate.   So how does it work?

Let me first speak from experience. After a 17-year legal career, I was fortunate to have a few bucks saved up between a 401(k) account and an old IRA. I watched my accounts go up, go down and never really show any gains.  This month, yours truly will be fabulously “50” years old. I don’t know about you, but the idea of working well into my 90’s does not sound like a great way to spend my golden years as I wait for my investments to make enough to live on.

During an appearance on a local real estate radio show, I met Rick, whose business is setting up self-directed retirement accounts. Rick explained to me the benefits and the easy steps. I could not believe my ears! I sat through a short presentation about the process, arranged for Rick to handle the set up, and within less than 2 weeks, I was ready to roll. 

I now own an investment rental in Scottsdale currently gaining nearly a 9% return.  Whoopee! This is especially nice since I admittedly had so little knowledge about how and what my investments were doing in that money market. 

There are so many real estate investment options available. Residential, commercial, fix/flips, raw land, joint ventures, partnerships etc. Another indirect option is to be a lender to real estate investors, hard money or long term - all secured by real estate. Having complete checkbook control of your self-directed account allows you the freedom to decide what the best investment is for you.

Most people have a better understanding of the real estate market than the stock market.  The ups and down of real estate move slower, allowing you more time to make thought-driven decisions about your money. Additionally, YOU have a choice about what YOU can buy with YOUR money, within guidelines.  Also, your accounts can legally borrow and/or loan out money.

I am not a financial advisor. I recommend you do your research.  Check out www.IRS.com , search for Publication 590 AND speak to a trusted CPA who is knowledgeable about this subject, because not all are. Your personal circumstances will dictate whether this type of investment makes sense for you.

Ready to hear more?  I will be hosting a free informative presentation with my trusted self-directed investment advisor this month.  For more information about date, time and registration for this event, please contact me directly. 

Patti Anderson is an Arizona Licensed Real Estate Broker at Nextage Realty Professionals.  With hundreds of sale transactions, her passion & focus is Customer Service and Educating others in Real Estate.  Receive a FREE COPY of “Questions to Ask Your Realtor.”   Contact Patti at 602-818-1667, azagent.anderson@gmail.com or visit her website at www.ScottsdaleHomeGirl.com  or www.searchscottsdaleaz.com.