Skip to content
  • About
  • Contact
  • Contribute
  • Book
  • Careers
  • Podcast
  • Recommended
  • Speaking
  • All
  • Physician
  • Practice
  • Policy
  • Finance
  • Conditions
  • .edu
  • Patient
  • Meds
  • Tech
  • Social
  • Video
    • All
    • Physician
    • Practice
    • Policy
    • Finance
    • Conditions
    • .edu
    • Patient
    • Meds
    • Tech
    • Social
    • Video
    • About
    • Contact
    • Contribute
    • Book
    • Careers
    • Podcast
    • Recommended
    • Speaking

Invest in real estate with money you have already saved for retirement

Vanessa Peters, MD
Finance
September 19, 2019
384 Shares
Share
Tweet
Share

So you’ve done your research and you are sold on the idea of investing as a limited partner in real estate syndications such as apartments, mobile home parks, or self-storage facilities.

“But,” you lament, “that means I need to have at least $25,000 just lying around!”

Once you have decided to start investing in real estate,  it may take some time to save 25 to 50 grand. But you may already have money to invest in real estate and not even know it: money that is languishing in an old IRA or another retirement account. Many of you have access to retirement funds to invest in real estate. Money that is currently fluctuating with the whims of the stock market can be transferred to a self-directed qualified retirement plan, allowing you to take control of your savings and create wealth through real estate.

If you have an IRA or any money in your 401k that was rolled over from a previous employer, you can transfer these funds to either a self-directed IRA or 401(k). What this allows you to do is invest this money in any variety of investments, including but not limited to the stock market. Here are a few options for investing in a self-directed plan:

  • Syndications
  • Passive real estate (worldwide): apartments, single-family homes, commercial property, land
  • U.S. gold and silver bullion coins or bars
  • Business startups
  • Tax lien certificates
  • Notes
  • Securities
  • CDs
  • Stocks, bonds, mutual funds
  • Commodities and futures

When I began investing as a limited partner in syndications, I realized that I had access to some rollover funds from my company 401(k), opened a self-directed 401(k) account, and have since stopped contributing to my company plan except for profit sharing. This allowed me to jump-start my real estate portfolio with three deals, two multifamily, and a self-storage facility.

The ideal retirement plan is a self-directed (sometimes called solo) 401(k) because you have true checkbook control of your money and invest as you see fit. With a self-directed IRA, you are able to invest in real estate and other transactions as listed above, but you have a third-party custodian that needs to approve your investments and can cause significant delays.  Also, self-directed IRAs are subject to UBIT (unrelated business tax income), a sneaky tax that gets triggered by investments that have debt involved (as most real estate does). There are several companies that provide services to help get you set up with a self-directed plan. These plans were traditionally for the small business owner. However, you can still qualify for one of these plans even if you do not have a small business. If you have a side gig, some part-time income, or even your real estate investment business, then you can have a self-directed plan.

The best part of being in control of your money is that you can take it out of Wall Street and from the fund managers that have been making decisions about your money that may be profitable for them but not necessarily in your best interests.

When distributions occur for investments that are in the retirement plan, all go back into the retirement bank account, including the proceeds from a sale. Imagine a large brick wall between you, the individual, and the LLC/retirement plan. And as with all retirement plans, the money grows tax-free, allowing you to reinvest the full amount of the dividends from your investments.

Other benefits of a self-directed 401(k) are the maximum contributions of $56,000 per year, the ability to borrow 50 percent up to $50,000 from your account, protection from creditors in lawsuits and bankruptcy, and the ability to purchase life insurance inside the plan.

There is also an option to convert some or all of your plan to a Roth, which allows you to pay taxes upfront on the contribution but the money grows tax-free and is not taxed at the time of withdrawal.

Why haven’t I heard of these plans?

Well, the retirement plan industry is a monster with over 25 trillion dollars in assets as of 2019. The vast majority of this money is held in paper assets on Wall Street, and the fees charged by these institutions are very profitable for them. They would rather you keep your money with one of them than take control and become your own trustee. This also means that you can take your money out of stocks, bond, and mutual funds and invest in other assets as listed earlier.

This is a brief overview to introduce the topic of qualified retirement plans.  To find out if your specific situation would benefit from one of these plans and to learn more, please contact one of the companies that specialize in self-directed retirement plans.

Vanessa Peters is a family physician and founder, VMD Investing.

Image credit: Shutterstock.com

Prev

Overcoming the challenges prosperity can bring to teens and young adults

September 19, 2019 Kevin 0
…
Next

My patients teach me, guide me, and remind me that I am here

September 19, 2019 Kevin 0
…

Tagged as: Practice Management

Post navigation

< Previous Post
Overcoming the challenges prosperity can bring to teens and young adults
Next Post >
My patients teach me, guide me, and remind me that I am here

More by Vanessa Peters, MD

  • When to tell your banker to mind their own damn business

    Vanessa Peters, MD
  • Why do I love being a 43-year-old physician?

    Vanessa Peters, MD
  • 3 tools doctors can use to prevent burnout

    Vanessa Peters, MD

Related Posts

  • Why social media may be causing real emotional harm

    Edwin Leap, MD
  • Improving drug adherence will take more than money and technology

    Skeptical Scalpel, MD
  • Patients turn to GoFundMe when money and hope run out

    Mark Zdechlik
  • A real-life example of irrational health care spending

    Taylor J. Christensen, MD
  • Who are the real superheroes of medicine?

    Batoul Harissa
  • Taking off the training wheels and becoming a real doctor

    Nathaniel Fleming

More in Finance

  • Retirement planning: Understanding sequence of returns risk

    Jordan Bilodeau, CFP
  • The short-term rental tax loophole: a game-changer for physicians

    Jeff Anzalone, DDS
  • Why every doctor should have a side gig

    Anonymous
  • Maximize your practice’s revenue: Follow these 5 billing metrics

    Aaron Morgenstein, MD & Heather Signorelli, MD
  • Character, not cash: the ingredients of a happy and meaningful life

    Miguel Villagra, MD
  • A physician shares his financial mistakes

    Varun Verma, MD
  • Most Popular

  • Past Week

    • Resetting the doctor-patient relationship: Navigating the challenges of modern primary care

      Jeffrey H. Millstein, MD | Physician
    • Nobody wants this job. Should physicians stick around?

      Katie Klingberg, MD | Physician
    • Healing the damaged nurse-physician dynamic

      Angel J. Mena, MD and Ali Morin, MSN, RN | Policy
    • Lifestyle change: the forgotten solution in health care

      Tyler Petersen | Conditions
    • From physician to patient: one doctor’s journey to finding purpose after a devastating injury

      Stephanie Pearson, MD | Physician
    • Breaking the stigma: Addressing the struggles of physicians

      Jean Antonucci, MD | Physician
  • Past 6 Months

    • The hidden dangers of the Nebraska Heartbeat Act

      Meghan Sheehan, MD | Policy
    • The vital importance of climate change education in medical schools

      Helen Kim, MD | Policy
    • The fight for reproductive health: Why medication abortion matters

      Catherine Hennessey, MD | Physician
    • Nobody wants this job. Should physicians stick around?

      Katie Klingberg, MD | Physician
    • Resetting the doctor-patient relationship: Navigating the challenges of modern primary care

      Jeffrey H. Millstein, MD | Physician
    • Why are doctors sued and politicians aren’t?

      Kellie Lease Stecher, MD | Physician
  • Recent Posts

    • How medical student loan forgiveness can advance health equity [PODCAST]

      The Podcast by KevinMD | Podcast
    • The rise of generative AI in health care: Here’s what you need to know

      Anil Saldanha | Tech
    • Finding peace through surrender: a personal exploration

      Dympna Weil, MD | Physician
    • The struggle to fill emergency medicine residency spots: Exploring the factors behind the unfilled match

      Katrina Gipson, MD, MPH | Physician
    • Unlocking the secret to successful weight loss: Curiosity is the key

      Franchell Hamilton, MD | Conditions
    • The teacher who changed my life through reading

      Raymond Abbott | Conditions

Subscribe to KevinMD and never miss a story!

Get free updates delivered free to your inbox.


Find jobs at
Careers by KevinMD.com

Search thousands of physician, PA, NP, and CRNA jobs now.

Learn more

Leave a Comment

Founded in 2004 by Kevin Pho, MD, KevinMD.com is the web’s leading platform where physicians, advanced practitioners, nurses, medical students, and patients share their insight and tell their stories.

Social

  • Like on Facebook
  • Follow on Twitter
  • Connect on Linkedin
  • Subscribe on Youtube
  • Instagram

CME Spotlights

From MedPage Today

Latest News

  • Nobody Wants This Job. Should Physicians Stick Around?
  • Early Postpartum IUD Placement Yields Low Complete Expulsion Rate
  • Hydrocortisone Reduced Mortality in Patients With Severe Pneumonia
  • Obesity Tied to Density of Food Stores Carrying Less Healthy Options, Report Finds
  • 4F-PCC No Help in Trauma Patients at Risk of Massive Transfusion

Meeting Coverage

  • Trial of Novel TYK2 Inhibitor Hits Its Endpoint in Plaque Psoriasis
  • Durable Vitiligo Responses With Topical Ruxolitinib
  • High Rates of Psoriasis Clearance With Investigational TYK2 Inhibitor
  • Rapid Improvement in Atopic Dermatitis With Topical PDE4 Inhibitor
  • New Approaches in the Bladder-Sparing Paradigm
  • Most Popular

  • Past Week

    • Resetting the doctor-patient relationship: Navigating the challenges of modern primary care

      Jeffrey H. Millstein, MD | Physician
    • Nobody wants this job. Should physicians stick around?

      Katie Klingberg, MD | Physician
    • Healing the damaged nurse-physician dynamic

      Angel J. Mena, MD and Ali Morin, MSN, RN | Policy
    • Lifestyle change: the forgotten solution in health care

      Tyler Petersen | Conditions
    • From physician to patient: one doctor’s journey to finding purpose after a devastating injury

      Stephanie Pearson, MD | Physician
    • Breaking the stigma: Addressing the struggles of physicians

      Jean Antonucci, MD | Physician
  • Past 6 Months

    • The hidden dangers of the Nebraska Heartbeat Act

      Meghan Sheehan, MD | Policy
    • The vital importance of climate change education in medical schools

      Helen Kim, MD | Policy
    • The fight for reproductive health: Why medication abortion matters

      Catherine Hennessey, MD | Physician
    • Nobody wants this job. Should physicians stick around?

      Katie Klingberg, MD | Physician
    • Resetting the doctor-patient relationship: Navigating the challenges of modern primary care

      Jeffrey H. Millstein, MD | Physician
    • Why are doctors sued and politicians aren’t?

      Kellie Lease Stecher, MD | Physician
  • Recent Posts

    • How medical student loan forgiveness can advance health equity [PODCAST]

      The Podcast by KevinMD | Podcast
    • The rise of generative AI in health care: Here’s what you need to know

      Anil Saldanha | Tech
    • Finding peace through surrender: a personal exploration

      Dympna Weil, MD | Physician
    • The struggle to fill emergency medicine residency spots: Exploring the factors behind the unfilled match

      Katrina Gipson, MD, MPH | Physician
    • Unlocking the secret to successful weight loss: Curiosity is the key

      Franchell Hamilton, MD | Conditions
    • The teacher who changed my life through reading

      Raymond Abbott | Conditions

MedPage Today Professional

An Everyday Health Property Medpage Today iMedicalApps
  • Terms of Use | Disclaimer
  • Privacy Policy
  • DMCA Policy
All Content © KevinMD, LLC
Site by Outthink Group

Leave a Comment

Comments are moderated before they are published. Please read the comment policy.

Loading Comments...