Did you know you can invest in real estate using funds you’ve probably forgotten about? For years, you’ve been socking away money into your IRA or 401(k) to ensure an abundant retirement. The problem? You’ve only been able to invest those funds into passive investments like stocks, bonds, and mutual funds. What about the investors who want a more active income stream with bigger tax benefits, more equity upside, and plenty of cash flow? Can you use your retirement accounts to build wealth with real estate?
If you ask Kaaren Hall, her answer is a resounding yes. Kaaren saw quickly how the real money was being made in real estate, so she began investing herself, later realizing that she could use her retirement funds to build a real estate portfolio faster. She founded uDirect IRA Services to help other investors build wealth a better way, opening up more options for passive income, so your retirement accounts can grow into the millions.
If you want to scale your real estate portfolio but don’t have the cash on hand, this could be your PERFECT option. Kaaren goes over exactly how to use your retirement accounts to invest in real estate, what you can (and definitely can’t) do when investing this way, and how you can start raising capital for your own deals using other people’s retirement funds. This is a $40 trillion untapped opportunity, so don’t miss out!
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Show notes at:
00:00 Intro
02:31 Quick Tip
02:55 Wage Worker to Wealth Builder
13:17 Kaaren’s Current Portfolio
15:07 The Self-Directed IRA Explained
19:56 Deal Deep Dive
27:48 The $40T Investing Secret
31:38 A Faster Way to Fund Your Deals
33:06 What You MUST Avoid
41:01 Connect with Kaaren!
42:16 Use Your IRA On Your Next Deal!…(read more)
LEARN MORE ABOUT: IRA Accounts
TRANSFER IRA TO GOLD: Gold IRA Account
TRANSFER IRA TO SILVER: Silver IRA Account
REVEALED: Best Gold Backed IRA
Real estate is considered as one of the most profitable investments to make, especially in the long-term. However, not everyone has the necessary capital to make a large real estate investment outright. But, did you know that investing in real estate using your 401(k) or IRA is a tax-free option?
Investing in real estate with a self-directed 401(k) or IRA means you can use your retirement funds to direct your own investments. This is an attractive opportunity for investors who want to take control of their retirement savings, minimize their taxable income, and build their wealth for their futures.
Here are a few things to keep in mind when investing in real estate with your 401(k) or IRA:
1. Open a self-directed 401(k) or IRA account
First things first, you need to open a self-directed 401(k) or IRA account with a trusted financial institution that allows real estate investments. The custodian will be responsible for administering the plan and managing your transactions.
2. Transfer or roll over your existing retirement plan
To fund your new self-directed 401(k) or IRA account, you can transfer or roll over your existing retirement plan into the new account. This process is typically simple, and you won’t have to pay any taxes or penalties for moving your retirement funds.
3. Identify the type of real estate you want to invest in
There are several types of real estate investments to consider, including rental properties, commercial properties, raw land, and REITs. Determine the type of real estate that matches your investment strategy and risk tolerance.
4. Conduct thorough research
Before investing in any real estate property, it’s important to conduct thorough research and analysis, including market conditions, rental income potential, and financing requirements. With a self-directed 401(k) or IRA, you can leverage your retirement funds to purchase property, pay for repairs or renovations, or to buy rental properties that generate additional income.
5. Follow IRS rules
It’s important to follow the IRS rules regarding real estate investing with your 401(k) or IRA. This includes understanding restrictions on personal use of the property, prohibited transactions with certain parties, and the potential tax consequences that may arise from your investments.
6. Secure adequate insurance coverage
Don’t forget to secure adequate insurance coverage for your investment property to protect your hard-earned retirement funds in case of any unforeseen events.
Investing in real estate with your self-directed 401(k) or IRA can help you diversify your retirement portfolio while minimizing your taxable income. With careful research, planning, and strategy, you can achieve your long-term investment goals and secure a comfortable financial future.
Can I convert my existing Roth IRA or Traditional IRA with Vanguard into this Self Directed IRA? These are my own IRAs, they are not tied to a W2 company.
If you're still working at the employer you cannot simply withdraw money out of a 401k until you separate. Each 401k is unique based on the employer, I'm exploring utilizing a loan feature in my 401k to borrow funds to get into real estate
This is great. Now we just need a better market for deals. Ha!
@19:50 I believe it's very unusual to be able to move 401(k) funds out of one's current employer. I've been able to do so only with funds that I had rolled over from a previous employer into my current one, but not any contributions I made since I joined. I'm not even sure how common that is; I know at least some plans don't allow that. But you can certainly roll over funds from a 401(k) with a previous employer into a SDIRA.
Good luck with largest real estate bubble in history. Artificial non organic growth never last
I would like to know what is meant by personal benefits; assuming making money (cash flow) is not a personal benefit? and secondly I dont think Dave's question about refinancing the property and paying the money back to your IRA was fully answered.
My self-directed ira buys a house for 100k. It appreciates and appraises for 200k. Can I personally buy the house from my SDIra at wholesale for 150k and sell it for 200k and pocket the 50k profit?
If you guys want to have tax free capital you can get it from your whole life policy with an IUL.
Too many people trying to do real estate, too many real estate influencers. Everyone cant do it. Hundreds of youtube channels talking about it
I Have several discounted turnkey rentals, no repairs, across the country available for purchase. Priced at 80% ARV
I will forever be indebted to you you've changed my whole life contiune to preach about your name for the world to hear you've saved me from a huge financial debt with just little investment thanks so much Mrs Pamela Willett
can I pay the principle of my mortgage on simple IRA?
This was very difficult for me to understand.
For smaller retirement accounts, I think buying tax liens is a great strategy assuming the property is actually worth owning.
The almighty owl has spoken!
What about using a standard Roth IRA to simply withdraw from to fund a first-time home purchase? Can your basis in a Roth IRA be withdrawn at any time without penalties or income taxes?
This is grateful I received a Paypal hack transfer of 4k to my bank account through the help of Fabulous Hackers.
A way to do the short term rental inside a self directed IRA (ROTH) is thru an IRA 100% owned C-corp. so the c-corp pays the regular 20% corporate tax and the rest flows thru to the IRA and grows tax free in perpetuity. 20% is nothing compared to the additional income from STR compared to a LTR
This episode was too choppy. I’m still not sure how someone can purchase real estate using their IRA. The episode was lacking actionable steps one could take if they desire to go that route.
Love the laugh ❤
Great episode, good to know about using a nonrecourse loan for the deal.
I would marry you David
Henry, why don’t you work with an architect!?
real estate is fairly tax advantaged, so it seems best for not putting in 401k or IRA. Maybe REITs since it's simpler and easier plus then the ordinary income can be deferred / avoided.
Great show! Just had a conversation on this topic with my CPA for a tax planning meeting after reading the chapter in the BP book on tax strategies that quotes Kaaren. One things the podcast didn't get into regarding the UDFI taxes was using a Solo(k), and I'd like to hear more about that. "The Solo 401(k), sometimes known as a Solo(k), is a more flexible and more powerful type of self-directed account. Using a Solo(k), Bob would be able to purchase a rental property using leverage without having to worry about UDFI taxes of 39.6%, regardless of how much debt he had on the property."
Han, Amanda; MacFarland, Matthew. The Book on Tax Strategies for the Savvy Real Estate Investor: Powerful techniques anyone can use to deduct more, invest smarter, and pay far less to the IRS. (p. 117).
Fun fact: David’s beanie baby would be a rare Greene polar bear, with a build like a spartan (unlike Care bear) they are more dominant than grizzly bears. Comparing to Dana White being in control of other MMA fighters. I agree with D Double REI’s comment in that Henry would also be a rare African Manticore with a big W between the ears.✌️
Accept the owl it's a symbol of wisdom and teaching.
David is a walrus beanie baby 100%
If you are not investing in AM2023X now, you are making a huge mistake……BUY BUY BUY ASAP!
Interesting..but confusing.