Mathew Owens outside
Mathew Owens outsideBy Guest Contributor Mathew Owens


Many investors do not realize they can invest in real estate right inside their own retirement account.  Traditional investment companies like Charles Schwab, Fidelity, and Meryl Lynch do not allow you to invest your own retirement funds into any other asset other than the assets they manage.  Typically that narrows your investments to stocks, bonds, mutual funds, money market accounts and a check the box style approach to investing.  This has left a majority of the current retires in a position where they do not have enough funds to survive throughout the rest of their lives if they invest in the same old investment strategies.  Many retirees do actually have enough funds in their retirement account to be able to invest it, live off of the interest for rest of their lives without depleting the principal, with the right investment strategies, which quite simply are not achievable through those traditional investment methods.  Plus the large companies that handle those traditional investment types make hidden fees off of the retirement accounts weather the account has made money or not and the investor takes all of the risk.  Coming from a business background that seems a little one sided to me.

There is a solution to the cash flow problem.  And that is Self-Directing your retirement through a company similar to the large traditional investment companies with a few key differences.  First and most importantly you can invest it in whatever you want with a few limited exceptions and take complete control of your own financial future.  You can invest in real estate, promissory notes, businesses and much more and all of the profits go right back into your retirement account tax differed or tax free in a Roth type plan.  This applies not only to IRAs but also for 401k plans as well.  Secondly they typically get paid with a fee structure that is disclosed to you up front versus the big investment companies that are not required to tell you what they make off of you and they purposely hide those fees.  It’s actually pretty easy to setup and as simple as setting up a traditional IRA or 401k plan.  You can roll over your current retirement funds into it and start investing as well.

Obviously when investing it’s important to get as educated as possible about any investment or business you plan on investing in.  Just because you can self-direct your investments does not mean you should if you do not know what you are doing or do not have the proper guidance.  It is imperative to understand what you can and cannot do inside your self-directed retirement accounts which are pretty easy to learn with the right education.  It is also extremely important to do the right due diligence on your investments before investing.  Not doing your due diligence is the number one reason investors lose money on an investment.  For example when investing in real estate some of the due diligence steps to do are:

  • Neighborhood analysis
  • Rental analysis
  • Renovation analysis
  • Market Value analysis
  • Exit strategy review
  • Cash flow and profit analysis
  • Return on investment analysis
  • Expense and income documentation
  • What team members are in place
  • How you plan on managing and structuring your investments

These are all key factors when investing in real estate and something to gain a detailed understanding about before investing.

Mathew Owens, CPA

(Guest Contributor)


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