Self Directed 401K and Real Estate

Yes you can buy real estate with your 401K. You can borrow against it, refinance with a bank, then pay back the 401K with no penalties. My 401K will only allow me to borrow half of the current value. They use the other half as collateral for that loan against the 401K. That cuts your funds in half! Being young my 401K doesn't have $100K in it.

There is one other option offered by most. It's called a self-directed 401K. You can roll it over into a self directed acount so long as you have a C-Corp or LLC and you can use that account to purchase real estate!

How does the Self Directed 401K work?

1.Create Entity (LLC or C-Corp). Your 401K company will create the entity with the appropriate state.
2.Create the Plan (Trust with Plan documents). Your 401K company will create the Plan and file with the IRS.
3.Rollover monies from IRA or 401K to your self directed account.
4.Setup Checking Accounts for the Company.
5.Direct Investments by purchasing membership or stock in a company (your C-Corp or another entity).

It'a way to get to ALL of your money instead of half and you don't have to refi with a bank to pay back a loan borrowed against your 401K. Of course you'll want to refi so you can have more funds available for more properties.

Own Your Situation,
Ben