You Do Have Money To Invest In Real Estate, You Just Don’t Know It!
Using Self Directed Accounts to InvestOne of the most common excuses I hear for not investing in real estate is “I don’t have enough money saved up to invest.” For many passive investments, such as multifamily syndications, a $50,000 minimum investment is common. Not everyone has $50,000 liquid sitting around waiting for a good investment opportunity. Or do they?
Most Americans who work high paying jobs participate in a 401(k) plan. Each paycheck, a percentage of their salary gets directed into a plan that buys stocks, bonds, and mutual funds. Over time this grows, hopefully. In a future blog I’ll cover the many issues with “investing” in mutual funds and why planning retirement solely by relying on one’s 401(k) is a recipe for a poor life. What most people do not realize is that there’s a way to use money in your 401(k), IRA and Roth IRA to invest in real estate, without taking it out of the retirement plan or paying early withdrawal penalties.
There is a little known tactic that is gaining popularity known as Self Direction. Savvy investors know about it, wealthy people know about it, and now you do, too! There are products known as Self Directed IRAs and Roth IRAs, Solo401(k)s and eQRPs that allow you to stay in a qualified retirement plan while investing your money in real estate. You current plan administrator will likely have never heard of this, and even if they have, they will steer you away from it. Why? Unfortunately, the answer is not pleasant. The short answer is that the Wall Street machine is designed to get and keep your money in it, to profit the elite wealthy bankers who run the system. The good news is that you can get your money back under your control and you can invest it in real estate, a true wealth building asset.
Self Directed plans allow you to roll your money into an account that gives you checkbook control of the funds. You can invest in real estate and other assets from this account, and it is still the same retirement savings, so you don’t have to worry about early withdrawal penalties. So if you previously thought you didn’t have enough money to invest in real estate, take a look at your IRAs and 401(k)s. You might just have enough to invest in your first real estate deal!
If you want to learn more about this topic, please reach out to me. Happy investing!
LinkedIn/in/adamulery
Comments (2)
Nice article Adam! As someone who studied the expense ratio fees associated with IRAs and 401ks, when I heard that these fees can really mount up to significant profit for the financial advisors who many trust with their money. I realized many do not take the time to check the fees associated with the funds, nor their allocation that their employer for the most part has chosen for them. For many its a set and forget as for some it can be too overwhelming to learn how to take control of ones retirement accounts. Gaining control of ones 401k / IRA capital and directing into real estate which has many more benefits over Wall St is a no brainer. I recently directed a sum from both my IRA and 401k into an eQRP as a hedge against any future stock market volatility.
Matthew Dunn, over 4 years ago
This is one of real estate’s best kept secrets! Thank you for sharing.
And I love the insight you shared regarding the misalignment of interest on the part of the wealthy bankers that benefit most from the average worker’s hard-earned savings...
Americans must reclaim control of their money, and there’s no better way to do that than by investing in real estate.
Great write up Adam.
Josiah Quansah, over 4 years ago