“The beauty of diversification is it’s about as close as you can get to a free lunch in investing.” ~ Barry Ritholtz

When it comes to investing, not everyone holds an in-depth understanding of the different types of financial assets. For the average investor, it’s advisable to diversify his/her investment portfolio. The same rule applies to your retirement savings. If you are a self-employed professional or owner-only business, a self-directed Solo 401 k account allows you to add different types of assets to your retirement portfolio. Some of the available options include real estate, mortgage notes, tax liens, tax deeds, precious metals, private equity, personal lending, and even the traditional stock/bond investments.

As a real estate investor, adding real estate to your retirement portfolio could be a lucrative option, considering your understanding and knowledge of the field. Here’s how you can purchase real estate with your retirement savings:

  • Open a self-directed Solo 401 k account.
  • Fund your account through contributions and eligible rollovers.
  • Choose a property for your portfolio, and purchase it using your retirement savings. If you’re short on funds, use a non-discourse loan to fund the purchase.
  • Make sure to buy the property in the name of your Solo 401k account.
  • Any maintenance and repair expenses should go out of your self-directed Solo 401 k account only. The same rule applies to any income generated by the property.

Self-directed Solo 401 k Account: Insuring your investment property

You’ll need to insure the property. This video put together by our team will help you understand the guidelines you need to follow to insure your Solo 401k property.

  • Insurance should be under the name of the Solo 401k trust.
  • If you get the insurance in your name, add Solo 401k trust as Other Interest.
  • The cost for insurance should go from the Solo 401k plan only.

Self-Directed IRA Plan: How These Investors Built Their Retirement Home In Belize

Written by: Dmitriy Fomichenko

Dmitriy Fomichenko
Elite

Dmitriy Fomichenko

Wholesaler,Landlord,Real Estate Agent
Dmitriy is the founder and president of Sense Financial Services LLC, 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.