The secret about buying real estate investment property using 401k & IRA funds

by Chicago Agent

One of the best kept secrets for your clients and for you is that they have the ability to purchase investment properties using their vested 401K or IRA funds. In fact most real estate agents don’t even know that this is a perfectly legal, legitimate retirement investment strategy. In fact, only about 1% of active investors know they can do this.

OK, so you’re probably asking yourself why don’t I know about this? or How come I have never heard of this?

Well the answer is pretty simple. Most financial advisors don’t want their clients to know about this strategy because it would result in lost commissions and management fees.

So why is this a good investment strategy? It gives your investor clients the following benefits:

• It helps them diversify their retirement investment portfolio to assets other than equities, mutual funds, ETF’s, bonds, etc.
• It provides your clients with tax deferred rental income and capital gains prior to retirement
• It gives your clients the opportunity to purchase additional properties with accumulated funds in their account
• It provides your client with a potential monthly income stream when they retire

So how do your clients go about doing this?

First, your investor clients must create and rollover some of their vested IRA or 401K investment.

Second, your clients will rollover existing IRA or vested 401k funds into newly established self-directed account.

Third, you and your client find a good rental investment property.

Fourth, following trust company guidelines, purchase and close on the investment property.

Fifth, secure a tenant and start renting the property.

So what’s in it for you as a real estate broker? This strategy can generate multiple additional sources of leads and commission income for you:

• Purchase commission,
• Rental commission,
• Multiplied by the number units,
• Multiplied by number of years,
• Sales commission,
• Referrals

So is it time for you and your clients to become part of the 1% of savvy investors!

Please be aware that certain types of activities involving “disqualified persons” are prohibited when facilitating one of these transactions. Have your clients consult with their CPA or Trust Company advisor to find out what types of activities or transactions are prohibited.

If you would like more details or information on this please contact Greg directly!


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  • Tony says:

    Horrible idea! Why don’t you also mention the restrictions as rental income must go into the IRA.

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