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Even if you doubt that this is possible, it is a reality for many savvy investors.
There are some who borrow funds from their 401k account. This is not the best way forward but it is worth looking into if you do not have another source for funding. However, before you rush off to get a loan from your 401k plan, be careful as there is a limit to the amount of money you can borrow. In addition, any interest you pay on the borrowed amount is not tax deductible. Therefore, be very careful when you use this option.
The second method of combining real estate and 401k investing is the rollover IRA. If your 401k plan allows you to rollover the funds into an Individual Retirement Account (IRA), should go ahead and take this benefit. Make sure you select the Self Directed IRA account type.
When you open a self directed IRA account, you have control over where your money is being invested. Obviously, there are limits but you can earn handsomely within these limit. You can direct the money so that it is invested in a real estate investment trust, also known as REIT, an apartment complex or a strip mall. When you sell the real estate, you will get a profit which can be put into your IRA. This method will see you making a lot of money and your retirement fund will grow substantially and that to tax-deferred.
Another method of using your 401k funds in real estate is asking your account manager whether it is possible to invest directly into REIT. If this is possible, you should immediately take the opportunity. It is a low risk and high return opportunity which should not be missed.
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