Have you ever considered investing in real estate, but wondered where the money would come from? You are not alone. Do what others have done and use your retirement funds in your IRA or 401K account.

You’re probably asking yourself how that can happen. Not to worry, because there is a simple solution called a self directed IRA (or 401K). Using one of these very special accounts, you can direct your money into whatever kind of investment you like, even real estate.

Of course, there’s lots of good reasons to do this. Number one, your money grows tax deferred until you start withdrawing the money, usually at retirement, when your tax rate will most likely be lower than it is now. That means your money will grow faster, because the IRS is taking a hunk from every dollar.

Next, self-directed IRA or 401K investing allows you the freedom to invest in something you are familiar with. Unlike the every day mutual funds, stocks, and cash funds most IRA and 401K money is invested in, you can actually invest in real estate in towns and neighborhoods you are familiar with.

Be aware that the government has rules for these self-directed accounts that must be followed. Never fear, because whoever you hire to manage your account will know and understand these rules, and guide you every step of the way. The number one rule is that the IRA or 401K owns the property… not you, Mr. Investor.

This rule can increase your costs and aggravation a little, because you can’t just pay for things out of your own checkbook, or deposit rents received into your own account. It all has to go through the IRA or 401K, and that means you will need to pay fees to the account manager /trustee. Not convenient, but not a deal breaker either.

As with every other IRA or 401K, all of your capital is at risk. The nature of real estate investing is that it is possible to lose money. It’s rare, but it does happen. At least with a self-directed account, you control the investments, and therefore you can insure you don’t invest in money losers.

Lastly, think carefully about whether or not self directed IRA or 401K investing in real estate is right for you. It’s simple to put in place, and it just may be the vehicle you have been searching for. Should you really allow some anonymous money manager in some distant city to control YOUR retirement funds?