Self-directed IRA in RE investment and mortgage notes. Benefits?

[Josue Vargas]

Recently I had questions about moving or withdraw funds from former employer 401K account to invest in RE. I've learned it takes a lot of impact with taxes and penalties and better off to move funds to Self-directed IRA.

Someone suggested to move the 401K funds to self-direct IRA and invest in RE and mortgage notes, since the move will not take taxes or penalties implications.  I'm not sure how this works.  

Any help from experienced investors with this type of transactions? 

Thank you,

Josue Vargas, P.E.