Can I Use My 401k To Buy A House

Updated : Sep 09, 2019 in Articles

Can I Use My 401k To Buy A House


Hello again this is Kris Krohn with REI TV. And today we’re going to be talking about 401k’s. Can you invest them on real estate? What are the restrictions? What are your options? Let’s get you educated. If you had to put money in 401k or real estate, which do you think is is safer? Neither? Probably the property.
Probably real estate. Yeah. Alright. At least you have something tangible. Yeah. That you could trade or whatever. 401k’s like IRA’s are an excellent source for investing in real estate. And I know a four different major ways of leveraging 401k to be able to purchase real estate. The first one is called doing what’s called a self directed 401k. Okay. A self directed 401k is actually where you are going to take your 401k out of the hands of the company and you’re going to put into different account with a different steward where you get to actually direct where those funds go. So, for example one of the things you can do, is you can direct those funds into a paid off piece of property. And so, if you found the right kind of property and your 401k is enough to buy a paid off cash. Then you would be receiving a tremendous cash flow. Another thing that you have is something that is called a non-recourse loan. So, again taking that self directed 401k, there are some banks that use none institutionalize funds where you can take some of the money and actually do a typical down payment on a property. Only certain banks will allow you to do that. The other option that you have is to actually just take your 401k out. And there’s two ways of doing that. One is with penalties, and one is without penalties. To do without penalties you’d be asking for something called an in-service distribution. So go talk to the director over your 401k to the company and ask them “can I take an in-service distribution?” And if you can that basically means that you actually have access to your 401k without having any penalties. And the fourth and final way is to see if you can actually just take the money out of your 401k and be penalized. WHAT?! Take my money out of my 401k and pay taxes and pay penalties? YEAH! That’s exactly what I am suggesting. It’s an excellent way to buy real estate. Don’t forget you will never ever, ever, ever get to avoid paying taxes. So whether it’s now or later, with the right right investment in front of you, “now” may be actually be your best option. Paying the 10% penalty, , I call that a cost of business. That was your choice to put it into the 401k. And there is a cost for taking it out. Unless you want to wait like 59 and a half and for some of you that so many years away that, that 10% penalty might in fact be a really, really good good decision. If you want to know how your 401k can be invested in real estate. There are all these different little new one’s on how to do it, do I self direct my 401k. Do I just pull it out, are there any exceptions to my 401k? And honestly the best thing to do is to get consultation. We called it a game plan and it’s something we offer to people for free. They’re going to send you this document right here and this game plan document has all sorts of information about 401k’s. And the right, wrong ways of how to use them and how you can use it for real estate. And then it comes with a consultation. So that if you have questions my team can answer those and ultimately see if it’s a great fit for you to use that 401k to start buying real estate, build your cash flow up, build your net worth up and take control of your personal financial situation. Use the link below the get your game plan scheduled.

9 Comments

  • but when you take from your 401K it is a loan that you will start paying back as soon as your next check. something to keep in mind and be aware of how much of a cut from your paycheck you are comfortable with.

  • It would be much better to take the money as a loan pay yourself back by the house the house would appreciate now you got your 401K money being paid back over time and the house

  • Yearly ROI of 12 to 15% on the real estate property negates the one time 10% scare tactic of the 401k administrator. It's your money and you should be able to invest it on a higher performing asset. Don't wait unit the twilight of your years to take action.

  • Most 401k or 403b accounts won't let you take the money out if you are under the age of 59.5 years old even if you pay the penalties. I am 53 and went wanted to take out all of the money from one of my 403b accounts and was told the it was not possible to touch until I was 59.5 years old even If I paid all of the penalites and taxes. I was able to take out a loan on it though.

  • I have bad credit score. I owe about 5k in debt. I pay $800 for rent and i have $8000 in 401k and $5000 in 401k roth. I really wanna purchase a house or atleast do a down payment and get out of renting $800/month. Any advice? im 32

  • Hello. I have the ability to roll a large part of my 401k into another 401k. Since i am eligible for a rollover, couldnt i just roll that into a self directed 401k, where i can use a non recourse loan to buy property? What banks could i use for non-institutionalized funds?

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