Most people think about investing in real estate in their personal name or holding it inside an investment company (such as an LLC). But many people are discovering that there are other options, including self directed 401k real estate investing.
That’s right, you can hold real estate in your self-directed 401k. It’s a powerful way to put your retirement fund to work by owning a cash-flowing asset and letting the income grow tax-deferred or tax-free until retirement. You may be thinking, “But that isn’t what my financial advisor/friends/family/internet strangers say you do with a 401k!”. And that is true, many people don’t know you can do this. However, if you want to grow your retirement account and don’t want to put that money into the volatile and speculative stock market then this is a strategy to consider.
Self directed 401k real estate investing in Baton Rouge – is it possible?
I used to work in corporate finance for an oil company, and every month contributed to my retirement account. Slow and steady, I added and added, doing dollar cost averaging, but I still had no control. The market went up, and the market went down. I kept adding the same amount, and watched my pool of mutual funds change based on the Greek debt crisis, trade wars with China, OPEC manipulating oil prices, and more events that I had absolutely no control over. There had to be another way. But what is it?
Most people are only aware that they can invest in stocks or mutual funds in their 401k or IRA. I’m here to tell you that self directed 401k real estate investments are possible, although you have to do it a certain way. Some IRA custodians don’t want to hold real estate for you, which is why you should find a self directed IRA custodian who will.
You purchase the property in the name of your 401k, not your personal name, and all income goes into your 401k. You can even pay for any management fees inside your IRA.
Should I invest in real estate in Baton Rouge LA with my self-directed 401k?
I will not tell you how to invest. It is not my job, nor is it my expertise. However, many investors are discovering the power of putting a cash-flowing asset into their 401k. That cash flow is like having an extra contribution each and every month in your retirement account.
Imagine the power of a consistently cash flowing asset that adds to your retirement account month after month after month with little or no work on your part. Wouldn’t that suddenly transform your retirement from something you’re worrying about to something you’re looking forward to?
You might even find, like many investors do, that putting a few cash flowing properties into your 401k could allow you to retire even sooner than you realized! What would life be like if you didn’t have to wait until aged 65, 70, or 75 to retire but could retire right now, or in five to ten years?
(And don’t forget about the amazing tax benefits: Depending on your 401k plan, that income could grow tax deferred or even tax free!)
Okay, how do I move forward and start investing in my 401k in real estate?
Before you can invest in real estate, you’ll need to move it to a self-directed custodian that allows you to hold real estate (not all of them do). This can be done pretty quickly and most custodians will help you make the transfer with just a bit of paperwork. A few options are Entrust Group, Pensco, and Strata Trust, but you should do your own research.
If you want some help, ideas, or even an introduction to a self-directed 401k custodian, we can help. Give us a call at 225-288-7209 or fill out our form and we’d love to help you make this smart move to self directed 401k real estate investing in Baton Rouge.