How to Invest in Passive Real Estate with Your Retirement Account

by Scott Schilling

Living here in Southwest Florida, we see first-hand how real estate can build wealth and create long-term security. But many people don’t realize you can also use your retirement accounts to invest passively in real estate opportunities, often with strong returns and powerful tax advantages.

Did you know your IRA or 401k can invest directly in real estate? With a self-directed retirement account, you can own passive stakes in multifamily projects, private notes, or even local developments, while keeping all gains inside your account.

Here are three quick case studies:

1. Multifamily Syndication (Self-Directed IRA)

$100k invested, held 5 years → $190k return (IRR ~13-14%). All growth stays inside the IRA until distribution.

2. Rental Property (Solo 401k)

$120k invested with nonrecourse loan → $12k annual net cash flow to the 401k. Note: leverage can trigger UBIT; a CPA can help plan.

3. Private Note (Roth IRA)

$50k secured note at 10% interest → $10k earned over 2 years. If Roth is qualified, income is tax-free in retirement.

Why it matters to you

• Tax-deferred or tax-free growth

• Diversification outside Wall Street

• Passive income that compounds in your retirement account