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Using Retirement Funds to Purchase 2-4 Unit Multifamily

investment financing Jun 07, 2021

Thinking about using retirement funds to buy 2-4 unit multifamily? By retirement funds, we mean qualified money. Your funds are in a 401k, or an IRA and you want to use it to buy real estate. So how do you do this?

When you're going to use financing for this kind of a deal, like a FIG deal, it becomes a little bit tricky. If you're going to borrow money, with the borrower being your IRA, typically, that lender is going to require non-recourse.

This means that if you don't make your mortgage payments, they can't sue you to get the rest of the money. All they're their recourse is the property and IRA itself.

Our team has not yet found a lender that's willing to do a non-recourse construction loan. We'd love to have one if you happen to know one... but that's the reason. If you want to use your IRA as downpayment funds, you're probably gonna have to move it out of the IRA. That's going to result in taxes and penalties that come from moving the money out of the IRA prematurely.

You can buy all cash through an IRA. You could probably even do a partnership through an IRA or buy an already completed multifamily unit. Once the unit is complete, yeah, you can get financing on that kind of thing. Absolutely.

In summary, the construction loan becomes tricky, as it pertains to the requirement for IRA loans to be non-recourse. If you have any questions about this reach out to us. We're happy to talk about it as it pertains to your individual circumstances.

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