Boost Your Retirement Plan with Real Estate – The Basics


“The most important thing in terms of your circle of competence is not how large the area of it is, but how well you’ve defined the perimeter.” ~ Warren Buffett

Are you a real estate investor, or perhaps, you plan to get into real estate investing?
If that’s the case, real estate is probably your preferred investment option for your retirement fund and why not? You already understand real estate investing, trends in your target market, and you enjoy more control over your investments.

Limited Options for Retirement Funds

As a real estate investor, you have plenty of choices for your portfolio, including residential properties, commercial properties, and even passive investments, such as notes.
However, as you plan for retirement, your investment options are cut down to the traditional stock, bond, and mutual fund investments.
Don’t you miss the investment discretion you enjoy in your real estate portfolio? I bet you do!
The good news is there are retirement plans that allow alternative investments such as real estate, mortgage notes, tax deeds, tax liens, precious metals, and much more.

  • SD IRA
  • Solo 401k

Self-Directed Individual Retirement Account (SD IRA) is known for its investment freedom, as it allows plan owners to make their own investment decisions. You’ll need a custodian to manage your plan and help you stay in the legal circles while investing in alternative assets.
Self-directed Solo 401k is a retirement plan targeted towards owner-only businesses and self-employed professionals. The only requisites for the plan are the presence of self-employment activity and an absence of full-time employees.
Let’s find out the exact step-step process of investing in real estate with your retirement funds.

5 Steps to Invest in Real Estate for Retirement

  • Choose a retirement plan: Start with a qualified retirement plan that suits your investment strategy. Make sure that your plan provider allows alternative investments. You can consult financial experts before choosing a plan.
  • Fund it with qualified rollovers: Fund your retirement plan through regular contributions and qualified rollovers. Your plan provider should be able to guide through the process.
  • Choose alternative investments: Choose among residential, commercial, or paper real estate (notes, tax liens, tax deeds). Create an investment strategy up front and choose assets that help in achieving your retirement goals.
  • Purchase it with your plan: The next step is to purchase your property through your qualified retirement plan. In case of a Self-Directed Solo 401k, your plan will hold the title of the property, and you will sign on its behalf. When using an SD IRA, your custodian will hold the title of the property. Depending upon your retirement plan, you can choose non-recourse financing, only in Solo 401k plans, to fund the purchase.
  • Treatment of income: Any income that comes out the property will go directly to the plan itself. Similarly, any maintenance or repair costs incurred in the upkeep process will go from the plan only. All income and gains generated by the property will enjoy tax-deferred growth until distribution.

Isn’t that simple? If you’re a real estate investor and ready to boost the ROI (return on investment) of your retirement funds, get started with a self-directed retirement plan.
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By Dmitriy Fomichenko

Dmitriy is the founder and president of Sense Financial Services LLC, a boutique financial firm specializing in self-directed retirement accounts with checkbook control. He began his career in financial planning and real estate investing in 2000. He owns multiple investment properties in various states and is a licensed California Real Estate Broker. Over the years, he has instructed hundreds of investment and financial planning seminars and has mentored thousands of investors.