401k, mutual funds, IRA . . . use it for real estate?

[Ryan Moran]

I've been actively looking for my first deal and in doing so I've been talking real estate around the office a lot.  One of my coworkers has expressed interest in investing with me but says that most of his money is tied up in various investment accounts.  What options does he have if he wants to get cash for real estate investments? Specifically he has:

401k: ~$110,000

Mutual Funds: ~$15,000 (was $30,000+ a few years ago)

Traditional IRA: ~$35,000

I've heard of moving money into a "self-directed IRA" but I'd like to hear from those with more experience. What's your recommendation? Thanks in advance!

-Ryan