Using Your 401k or IRA to hold, flip and lend

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Good morning Bigger Pockets! Our law offices provide live education for our clients and a number of our real estate investors have recently requested a comprehensive, 3-4 hour seminar about self-directed IRAs, 401ks Trusts and IRA LLCs.

We wanted to gauge the interest here on Bigger Pockets and if people are interested, we were considering filming the live education and distributing it via the forum. Our big questions are: whether such a seminar would be useful for the community here and what questions investors would like to see answered during the class?

We're holding the live education component on May 30th, in Salt Lake City, with the video to be distributed shortly after! Looking forward to your questions and any way we can help! Thanks all!

Breglio Law Office

Using your self directed IRA to invest is a great way to build retirement wealth, if you dont know how to do this then I suggest you give this webinar a try.

@Jeffrey Breglio I would be interested, I think it would be good ideal for most investors to watch.

I would be interested. 

I will definitely be interested. Real estate can provide more returns than other funding options with retirement plans.

Jeffrey Breglio

Sounds like it would be a very helpful educational opportunity. I would definitely be interested in attending in person if possible, but distribution through the BP forum would be awesome. 

I would be most interested in learning about self-directed IRAs. Thanks for putting this on!

Interested, thanks!

@Jeffery Breglio It would be a useful tool as a webinar for young and old!

Self directed IRAs sounds like a great strategy but not everyone can qualify to contribute.  

If you don't qualify for a Roth IRA, I heard that you can contribute to a Tradition IRA (assuming you don't qualify for this either because you are employed and have a 401k plan or similar) Then you convert the Tradition IRA to a Roth IRA.

Is this possible and legal. I have just heard about it but have never tried myself. This would open up opportunities for more people to start a self directed IRA to invest in real estate.

Can you cover this topic?

I meant Traditional IRA. 3 hrs of sleep has taken a toll on me.

I think a video would be great. Personally, I have a SOLO 401K. I do HML inside it. I don't believe in putting RE inside of any retirement account because you lose the ability for deprecation losses as well as writeoffs for taxes, insurance, etc. Yes, the income is tax deferred, but you lose the ability to get 27.5 years of depreciation on residential property. To me, that is not a good tradeoff. Holding RE outside of a retirement plan allows the owner to get almost 30 years of tax breaks. If you want to make great returns inside your retirement account, doing HML seems to be a great alternative. I did two HML within the last couple of weeks. The loans were at approximately 50% LTV and at 12% plus 3.5 points on one and 4 points on the other. This provides a nice steady ROI and as the funds come in I can lend them back out. I think it is important that investors understand the pros and cons of putting RE inside of their retirement accounts before taking action. Once the asset is placed there, it cannot be taken out except as a distribution.

John,

Thank you very much for this information. I joined a certain real estate investment company that is a one stop shop for individuals like myself wanting to invest in turnkey properties. The question has been asked what money can I bring to the table and if not, am I willing to utilize my 401K to help with the purchase of my first property? I have not given any information in regards to my 401k other than I have one and I wish not to use it at this time. Thank you for helping me put some things into perspective.

The Webinar will be a great Idea! The question I would like answered is: Can I invest my 401K and come up with a reasonable growth Equity market strategy or game plan to help secure my financial future?

Thank You,

Kemi

A financial advisor I am NOT. I like doing HML with my SOLO and that works for me. There have been tremendous profits in equities the last few years and some argue that is the best investment. If you don't have one, consider talking to a financial advisor. Watch out though...there are some that are only after every dime than can take from you regardless of the advice they give. It might pay to talk to more than one. As far as the video mentioned by the OP, I am sure there will be some good advice or ideas to be had. Never hurts to look at different perspectives! I personally like doing the loans and don't feel comfortable putting money into the stock market at these levels. I could be wrong, and it could be 20K dow in no time!

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