Investing with your IRA

Invest your 401K in Real EstateMany of our potential investors don’t realize that they have the option of investing with us using money in retirement accounts such 401Ks from a previous employer or current IRAs. Using money from these sources can be easier for a household since the money typically won’t be needed for a long time, and has the added benefit of deferring income taxes on investment returns until you begin to make withdrawals.

(Of course, we can’t provide tax or legal advice and if you have any tax or legal questions you should consult your tax advisor and/or attorney.)

401K Accounts

In the case of a 401K account with a previous employer, you have the option of rolling over that money into your own self-directed IRA account using a third-party IRA custodian service. We’ll discuss how to choose the right custodian in just a minute.

In the case of a 401K account with a current employer – unfortunately you will most likely not be able to use it for this type of investing.

IRA Accounts

If you have a self-directed IRA account, check with your current custodian to review the range of investment options they have available. Most only offer traditional options such as individual stocks or bonds, stock and bond mutual funds, CDs, money-market funds and REITs. In that case, you can choose to move all or part of your money to a self-directed IRA custodian with more flexible investment options such as real estate, trust deeds, mortgage pools and private placements.

Choosing the Right Self-Directed IRA Custodian

It’s easy to find IRA custodians – simply Google “IRA Custodian” and a number of them will show up in the search results. If possible, try to find those with an office near you. Then you can go visit them if you have a question or concern. (If not – it is possible to manage your accounts remotely.) Also find out what investment options they have available, and be sure to get a summary of their fees. It’s generally a good idea to compare fees across different providers and consider how they will affect your portfolio. Since most of the fees are absolute amounts rather than percentages, they affect larger portfolios less than smaller ones – but they will have the effect of reducing your total return. However, if you choose the right investments you can more than make up your custodian’s fees.