Start or Buy a Real Estate Business

Self Directed 401k

Start a Business With Your Retirement Account

The success of starting a new business, or buying an existing business is tied to the market for its goods or services, ability to beat the competition, access to resources, and the capabilities of its management team and its employees. Some of the risks involved with starting a business can be minimized by buying a franchise or by buying an existing business due to much of the initial groundwork has been laid and many of the initial hurdles have been dealt with.

Because of the unpredictability of investing in a business many traditional IRA custodians do not allow IRAs in their care to participate in such investments.

Investing Wisely and Freely
It is sage advice that you should not invest with money you cannot afford to lose. While we cannot predict the future, if you do your homework and invest wisely you can make money. This is one reason it is so important to choose a self-directed IRA expert who knows the game and can help you play it.

A Real Estate Business is a Clear Favorite
Owing to the impressive return on investment generated by real estate investments, IRA advisors are urging their clients whose 401(k) plans are tied to traditional investments like term deposits and mutual funds to convert their plans to self-directed IRAs for an enhanced degree of flexibility in managing their investments.

Self-Directed IRA versus a Self-Directed 401k
A self directed 401k plan might be more advantageous than a self directed IRA when purchasing real estate if you:

  • Want to put sweat equity into your investment
  • Earn a salary for managing your property
  • Loan yourself money as a short term bridge loan
  • Want to use the funds in your retirement plan as the down payment for your investment
  • Use recourse financing or financing that is in your personal name
  • Want to occupy part of the property and rent out the rest of the space

A self directed IRA has many more restrictions and than a self directed 401k plan. In a self directed IRA, you cannot put any personal work into your investment property even if you have checkbook writing privileges. In other words, you can’t do the landscaping on your investment property or much less pay yourself a salary to do the work even if you could save a buck or two. You cannot extend credit or loan money to your IRA plan.