Using your 401k to invest in rental properties

[Connor McErlean]

Does anyone have experience using their 401k to invest in rental properties? I understand the basics of the process but was hoping for some more personal insight! Comment with the good, the bad and the ugly. I’m curious to hear about your experiences!

[Brian Eastman]

@Connor McErlean

While @Greg Scott it technically not wrong, I would suggest that he is answering the wrong question. If you were to ask is is better to invest in real estate with an IRA or personally, there are a variety of different factors to consider, and in many cases the personal investment will work out better.

But the real question is, would investing my IRA/401k in real estate help me grow my retirement savings more reliably than what the IRA is invested in today (likely stocks and funds)? That is a more apples to apples scenario to evaluate.

As a plan provider, we have worked with thousands of clients who have chosen to diversify their tax-sheltered savings into real estate and other alternative assets and achieved success.  I'll let actual investors speak to your questions from real life experience, but wanted to help you approach the concept from the right starting point.  

The main thing to do is research and chose professionals to work with, not only from the plan setup side, but with respect to your entire team of real estate, tax, legal, etc.