Real Estate Investing Meets Self-Directed Group 401k Plans!

A very rarely talked about strategy for obtaining large amounts of private capital is the little known self-directed 401k group plan. Although individual employees have very little control over their investment options, business owners can move their 401k to a company that offers self-directed 401k options. Those funds can then be invested in real estate notes and similar investments vehicles. Even small companies can provide a powerful source of funding for your real estate transactions, and the asset-backed investments that you can provide them with have the ability to create an astonishing win-win opportunity.

Pros:
If you can get even a small company with a few employees to become a private lender for your deals, you also open up the possibility of building relationships with all the employees of that company and offering them individual opportunities to fund your deals. The employees will often have more invested in their IRA or savings than they do in their 401k account.

Cons:
Business owners that offer 401k benefits to their employees are often looking for the “quick fix” by selecting a 401k plan that is easy to setup and forget about. These plans usually offer a handful of mutual funds to choose from, which makes the employers involvement in the management of the 401k plan very minimal. In order for the business owner to convert their current plan to a self-directed model, they will have to be fairly savvy and willing to do a small amount of hands-on work to move the funds to you and ensure investment security for their employees by fully understanding your investment opportunity.

Strategy:
Read up on how a self-directed 401k works and request some brochures from a company that offers them. The brochure will sell the idea for you. You simply explain what you do and what you can provide the company. The brochure and the company you refer the prospective lender to will handle the rest.

Recommendations to begin with:

Equity Trust Company
http://www.trustetc.com/

Entrust
http://newdirectionira.com/