How Can I invest My 401k in Real Estate?

One beauty of having a qualified retirement account is knowing that the earned income will grow without applied taxation. For most adults, this means annual investments into a 401k or other account could later be used during retirement years. A lesser known method of building more income through retirement planning is investing in real estate. If you have ever asked how can I invest my 401k in real estate, you are not alone. 

Can a 401k Legally Own Real Estate?

The rules of every retirement account direct adults what they can or cannot do in terms of an investment. A 401k is one of few types of accounts that can legally own standard or rental real estate as long as the rules are followed. Because most people have a managed account through a trustee, getting approval to purchase a property for direct use as an investment could be a roadblock. A rollover into a self-directed plan could be a better option.


Pros of Investing in Real Estate with Your 401k

A solo or an employer sponsored plan could be eligible to own a rental home. This provides the wealth protection that a person who is not interested in diversifying through a mutual fund can seek. 

Most formations of an IRA account access fees on distributions that are taken before age 59½. Real estate cash that builds inside of an account can be tapped into at age 59½. This provides one of the fastest growth strategies available to adults.

A Roth conversion is available for most forms of a 401k to help an account owner take advantage of tax-free income growth. Many forms of accounts could qualify for a real estate purchasing including simple IRA, SEP, 403b and other sponsored plans.

How to Use Your 401k to Buy Real Estate

IRA funds can be borrowed against to complete a purchase in the housing industry. This can be a strategy that is right for a larger percentage of adults who cannot put up their own cash to buy a rental home. Non-recourse loan lenders are available to guarantee a loan if financing is needed to cover the remainder of an investment home purchase. 

The possibility of buying a house that will produce monthly rental income is available to all adults nationally. One of the simplest methods of buying a property is to use a turnkey company. This provides a managed home that already includes a lease agreement. More information about 401k real estate investing strategies can be found in the free investor guide on this website.

Schedule Now

If you’re ready to get started with JWB, schedule a strategy session with our property investing experts now!