This approach involves leveraging retirement savings to acquire real estate assets. For example, funds can be withdrawn or borrowed against within the confines of a self-directed 401(k) account and used for down payments, property purchases, or related investment expenses. This strategy differs from traditional financing methods and requires careful consideration of regulations and potential risks.
Diversifying retirement portfolios beyond traditional stocks and bonds is a primary motivation for this investment strategy. Direct ownership of real estate offers potential benefits such as rental income, property appreciation, and tax advantages. Historically, real estate has served as a hedge against inflation, making it an attractive asset class for long-term investors. However, it is essential to acknowledge the illiquidity of real estate compared to other investments.
