Investing in Real Estate With Your Solo 401k Plan

Investing money fruitfully is not everyone’s strong suit, especially when your retirement funds are at stake. The majority of the retirement account holders are baffled with the plethora of investment options available to them. Their mind battles to choose among business investments, stock market, precious metals and real estate etc.

Qualified 401k Retirement PlanInvesting in the stock market or precious metals require an active participation and awareness of the respective markets. On the other hand, business investments can be equally risky considering the scope of profit and loss over the longer run. Real estate offers a safe haven for passive investors and small business owners. Solo 401k retirement plans allow investments in real estate and this post will help you understand the procedure.

What are the different types of real estate investments?

  • Commercial apartments
  • Duplexes
  • Condos
  • Real estate notes
  • Raw lands
  • Tax liens certificates

How to start investing in real estate with Solo 401k?

Investing in real estate requires initial efforts but once done, it is a passive investment. One has to go through some essential formalities to complete the procedure.

  • Start by opening a Solo 401k account.
  • Identify a suitable property for your portfolio.
  • Purchase the investment property as per the norms of the Solo 401k Plan – no need to seek custodian consent.
  • Title to the investment and all transaction documents should be in the name of the Solo 401k Plan. All the documents regarding property investment must be signed by you as the Trustee of the plan.
  • All expenses paid for the investment property must go through the Solo retirement Plan. And all rental income checks are to be deposited directly in the Solo 401(k) bank account.

What are the benefits of investing in Real Estate through Solo 401k?


  • Flexibility: Solo 401k plan permits an individual to carry a checkbook for the account because the Solo 401(k) Plan provides the participant the ability to serve in the trustee role. This gives an individual freedom to fund an investment at any moment.
  • No limitations: A solo 401k aspirant can buy domestic as well as any foreign investments comprising residential or any real estate commercial property. It also allows an individual to avail tax advantages such as tax deferral or tax free repatriation of income.
  • Financing: If you are running short of funds for purchasing the property, Solo 401k allows you to utilize non-recourse financing to fund the purchase. As long as the loan is non-recourse, there will be no tax or penalty to take out the loan.

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