How Can You Use Your IRA or 401(k) to Invest in Real Estate?

By using your IRA or 401(k) to invest in real estate, you can increase its annual 
growth by a considerable margin.

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Have you ever heard of a self-directed IRA or 401(k)?

Like many of us, you probably have a healthy 401(k) or IRA that’s been built up over the years and you’re now letting the market go to work on it. That’s totally fine, but here’s the exciting part: you can direct that money into a self-directed plan and use it to buy investment properties. 

Think of that IRA or 401(k) money as funds to be used for investments. There are some restrictions, but if that money is producing a return for you, you can use it for any vehicle.

How would this benefit you?

Imagine you had $200,000 in an IRA or 401(k) and you wanted to use that to buy a $200,000 condo. You’d be able to buy that condo free and clear, and then rent it out and start collecting rents checks. If you charged $2,000 a month, that’s $24,000 per year that would go back into your IRA or 401(k). 

As that investment appreciates over time, you could sell it down the road for—say—$400,000. That’s on top of the $24,000 you’ve been collecting on a yearly basis from your renter(s). Additionally, you’re allowed to contribute to your IRA or 401(k) every year. Some allow as little as $5,000, but some allow a contribution as high as $55,000. 

This way, you can almost quadruple the growth of your IRA or 401(k) instead of just letting it sit on the market. 

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You can quadruple the growth of your IRA or 401(k).

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If you’d like to learn more about using your IRA or 401(k) to invest in real estate or you have any other questions, please don’t hesitate to give me a call. We’d be happy to help.