"Can I use 401k for real estate investment?" Crazy Google messes
those words up but a lot of people are wondering can I take the money
I have in my 401k, can I leverage it for this powerful thing called real estate?
Hey there, my name is Mike Fritz. I'm the founder of Titanium Capital Investments
and the multi-family CEO system and my greatest passion is helping investors just like you create
financial freedom with multi-family real estate. And in this video, I'm going to answer the question
"Can I leverage my 401k money and invest that into real estate?" But make sure you stick around to the
end because I have a free gift for you that will help you see what type of real estate is the best
real estate to invest in and how to get started. So, a lot of people are asking, "Can I leverage my
401k and invest in real estate?" and the answer is yes, no and maybe so, and I'm going to tell you why.
I'm going to share with you why each one of those can apply to this specific question. The first one
I want to start off with is no because a lot of times if you have an active 401k at a job
you currently work at and you're putting money into that continually, most 401k's will not allow
you to take that money and invest it into real estate. That doesn't mean that it can't be done
and I'll share that with you in a minute. Most 401k's limit your ability to invest in outside
investments with that money. So, each month when you put money into your 401k or each quarter or year,
you have to understand you're putting money into a 401k and it's pretty much just gonna sit there.
So, that's one of the things you have to understand with 401k money. So, some people might wonder, "Well,
Mike, then why ever invest in a 401k?" It's a great question because you're going to make more money
investing in real estate than dumping it into a 401k. The only thing I really love about a 401k
is often employers will match money that you place into your 401k up to a certain amount.
So, if they will match you up to 10,000, so you put in 10,000, they put in 10,000,
that's $10,000 of very free money and I don't know what you like but I love free money.
The greatest benefit of a 401k, since you can put money in there and get that match, that's powerful,
but you are limiting yourself if that's the only place you're investing because you are limiting
the amount of portfolio you can diversify into, especially in real estate. So, then the equation
becomes this. "Will I make more money investing into my 401k even with the match versus taking
that money that I'm going to invest in my 401k and investing in real estate?" and often it takes
a long time to figure that out because it depends on how much you put into your 401k and how much is
matched by your employer. But while you're working at a current job leveraging the 401k option, if the
employer has a match even, what you want to know is that most 401ks will not let you take money from
your 401k and invest it in outside investments. And the 2nd answer is maybe so, and here's why we
say maybe so. Some 401k plans have a real estate investment fund on their list of things they
invest in. So, by investing into your 401k, you're leveraging real estate. The problem with that is by
leveraging the funds inside of real estate, they're yielding often the same, maybe a little bit higher
returns than you're going to get in your 401k elsewhere. So, yes, you may be able to invest in
real estate but it actually would be through your 401k by investing into your 401k that money
is leveraging real estate versus taking money from your 401k and placing it into real estate.
So, if you have a 401k, you can check what's on the investment menu inside of that 401k and see what
kind of options are available. If you can select some of those options of what you want your 401k
aimed at, then you may be able to leverage some of the real estate options that exist
especially in real estate investment trusts or reits where you can invest in money just like you
invest in the stock market. Before we go on to our last tip, would you share this video with as many
people you know that have a 401k. We want to help people understand how to leverage their 401k when
they can, when they can't, so that they can continue to see this thing called real estate really impact
their bottom line. So, please share this video with as many people that have a 401k that you know.
And the 3rd answer is yes and here's what that means. If you have an old 401k, a 401k in which you
had it a previous employer, so a previous employer, you had a 401k, they invested into that 401k with
you, meaning they matched your investment and you left that job, that's an older 401k,
you can take that 401k and roll it into a new type of retirement account. So, the best model is to take
that 401k and roll it into an IRA that you can invest from and more specifically, an SDIRA or
a self-directed IRA where you can take that money and invest in anything you want. The power of an
SDIRA is when the money goes into your IRA, you can invest into real estate and when the money
comes back in, you're not taxed on the difference. So, if you're investing 20,000
and you put back in 21,000 you're not taxed on that extra thousand dollars and then that money
keeps growing inside your SDIRA. So, that's one way to leverage an old 401k. So, if any of you have
a 401k that's attached to a previous employer that you left that job and you came to a new
employer, that old account can be rolled over in to an SDIRA. One of the things we help investors
do that invest in our deals is to restructure some of their retirement funds. For example on
a recent investment, we had 2 investors that wanted to use their IRA but they weren't sure how
so what we did was we helped get that IRA into a self-directed IRA. The process is similar from
a 401k to an SDIRA so we have a custodian that helped them move that money then they were able to
invest in our deal from that pool of cash. So, when that cash comes to us, we invest it in real estate
and when we write checks back to them, the money they're earning from the deal, we write it directly
to the IRA company, they place it into the account, they never see the money, they don't have to manage
it and it's just continually growing. This is a powerful way to earn revenue off of an account
you're not using. This is one of the things I love about retirement accounts. You can place that into
real estate and really see your investment start to grow week after week after week, month after
month after month and of course as the years go on. One of the powerful things of having an old 401k
is you can take that money, roll it into an SDIRA and you're not really used to living on
those funds. See, here's the thing, all of your income and expenses aren't dependent on that money,
that's the power of it, right? You're not used to having that money so investing that, your lifestyle
doesn't really change. So, you can take that 401k, that old 401k, put it in an SDIRA and you can
actually start experiencing real estate without really dipping into your own savings or your own
monthly income. Currently in the United States of America, there's 29 trillion dollars parked in
retirement accounts, that's a lot of money. There's loads of money parked in retirement accounts
and a lot of that money could be transitioned to accounts that could leverage real estate and
if that's you, if you're somebody who has one of those accounts and want to move it to a piece of
real estate, then this is what you need to do. You need to check with wherever your 401k is at, get
it into an SDIRA or if you have an IRA, move it over to an SDIRA and let's start investing in
real estate because real estate is going to give you way more advantages than just parking it into
an account and accepting the return on investment that comes. About 7 months ago, we walked into
a property, it was about a million dollar property, we need to raise about 300,000 to
get into a deal. I had an investor that really loved the idea of investing in real estate but
didn't have the capital. So, we began to talk to him and see where he was invested, where his money was
and we found out he had this IRA that had been parked for a while and guess what? It came from
a 401k. So, he took his 401k and moved it into an IRA because it was a little more moldable and
it was going to get a little bit better return and so he started seeing some higher returns. He really
wanted to invest in real estate but he didn't know how and he looked into his bank accounts like, "Listen,
I don't have 50 or $100,000 to put into real estate so what should I do? Can I get into real estate?" So,
we started looking at his investment portfolio and we found this IRA, wasn't really using, not doing
anything with, helped him move that to an SDIRA and were able to get him into one of our real
estate deals and now he's earning a great return on that just because we were able to look at his
investment portfolio, see where his money's at and actually see what can we do for him and we found
this retirement account. He could start taking advantage of real estate and you might be in
that same boat. You might have a retirement account that could be funneled to real estate. A few more
questions about real estate, our team talks to investors every single week about investing in
deals. In the description, you're going to find a link to our website, titaniumcapitalhq.com.
titaniumcapitalhq.com and you can book a call with our team and we'll walk you through
how to actually start navigating your finances to get into some real estate. So, go ahead and click
the link in the description, titaniumcapitalhq.com, come into our world of investing, we'll show
you what it looks like to invest in a deal and actually make money without doing any of the work.