Advice for my father

Hello everyone

I read and check this forum from time to time, probably for a couple years I guess. I have a few rental properties, but really I’m just a beginner. I know very little compared to you guys that do this professionally.

So I thought I’d run a question by you. My dad retired from a career of 28 years 4 years ago. He left this job because he hated the new owners. He immediately got a new job doing similar work but at a pretty significant pay cut. At the time I guess he thought it wasn’t that big of a difference, well, that and he just really didn’t use to care about money or finances. He’s getting closer to retirement age now, and is starting to realize he really needs to make some more money soon, maybe for another decade or so now.

Im really wanting to help him get into real estate, maybe even full time. He has a decent 401k leftover from his previous career. And I’m trying to convince him to use it to invest in a multi-family complex that he could just maintain himself(very very handy fellow) and maybe have the same cash flow as his job is paying him now.

I’m also trying to convince him to help me start flipping homes. But he just doesnt seem to believe he can make any money :confused:

What do guys think about using 401k retirement money for investing in real estate?

What course of action would you suggest to your dad?



I understand and believe that social security will not be available to me until I am in my 70's, however I probable will not need my benefits and because I love my work I expect to still be working well into my eighties! Of course I am planning on living until I am at least 200 or 250 years old! LOL 

I highly recommend to new investors to work wholesaling as it takes very little money to operate and get started.

Your dad can convert his 401k into a “Self Directed Individual Retirement Account” (SDIRA) and invest in real estate. What he can not do is invest SDIRA money with you, as it is not considered an “Arms Length” transaction as you are immediate family.

Now your dad could do “Fix and Flips” himself with his funds and he can manage the process, but he will need to sub-contract or pay a handyman to do the work as SDIRA rules do not allow him to be compensated for his work.

To buy an apartment building with SDIRA funds requires a “Non Recourse” loan and he must have a property management company handle rentals. Now I suppose he could do repairs but he could not get paid for his time as he would own this property under his SDIRA.

There are hundreds of thousands of people handling their own investments using an SDIRA.


I wouldn’t advise your father to touch his hard-earned retirement monies, heck no.

Why not advise him to keep his job, and look for a reasonable fixer duplex that he could owner occupy and rehab. Try for a low-down-payment FHA loan for this.

Wealth and security can be created in baby steps. Keep him in his comfort zone because illness or disability could happen. Life happens when you are not looking. Don’t put retirement monies in a high risk arena. Keep it simple, and let him go to work on that fixer house.

Good luck and let us know how it goes.


I agree with @furnishedowner, I would NEVER recommend using retirement benefits to finance real estate investment. There is just too much risk in real estate. If something goes wrong, and it will, you would be jeopardizing your father’s only way to support himself in the future.

Now, investing in MF together sounds like a very good idea. The passive income could help you and your father. Remember to never risk more than you are able to lose. Using bank financing as leverage can help offset some of that financial risk and increase ROI.


I like furnished owner and campbell simon as both are very intelligent, experienced and smart guys.

But the truth of the matter is “What is a 401k retirement account”? And “How is that account managed and invested”?

Well a 401k is a tax qualified defined contribution pension plan account and this account is managed for a fee currently averaging more than 0.78% or a little over 3/4 of 1% per year. Now keep in mind that choosing a mutual fund to invest all or part of your 401k into also has additional fee’s and cost’s known as “Front End Load, Back End Load, Deferred Sales Charge or Redemption Fee’s” or the potential of 12b-1 fees.

These charges add additional cost’s (Load) to the cost of your 401k every year. These cost’s could be as much as a 1.5% fee in aggregate to your account, in an account where 401k’s generally yield a 7% average return per year this 1.5% cost reflects a life time aggregate loss of returns as high as 28% compounded over a potential 50 year period.

Now the fact that 401k’s are primarily limited to only investing in Mutual Funds, Collective Investment Funds, Variable Annuities and Pool Guarantee Investment Contracts in which all of these funds depend highly on the economy and the stock market.

Now the stock market lately has been a very volatile platform, in fact I predict that there will be a taking of profits by investors in the near term future capturing profit gains reflected over the last few years. I am not the only investor who sees a potential profit taking sometime in the next few years that will reset the value basis of the markets.

Industry analysts predict a large market correction which could be 20 or 30% of current market values, it is why big investors like Warren Buffet have been reducing their stock exposure going to cash!

With that said SDIRA investments made into a diversified portfolio of precious metals (10%) with REIT shares, Trust Deed Notes and all Cash property investments can provide a better yield and income than the adjusted (For Cost’s) 5.5% yield on 401k returns. In fact that diversified portfolio can yield in the 8 to 13% range of annual returns.

No you can not be stupid or greedy about your investments and always want to keep some prudent reserve of cash within your SDIRA however with a little research and diligence you can protect your retirement nest egg while investing in less volatile markets.

But the truth be told there are hundreds of thousands of investors who have converted their 401k into a SDIRA and are investing in alternative investments with less risk and less market volatility.

This is in fact a fairly low risk area of investment as real property, trust deed notes and REIT’s are secured by real estate and precious metals kept in a hosted account as hard assets has the same secured effect. Now timing is important however once in leave it in as all of these types of investments have historically done better over time.

If the stock market readjusts by just 20% it will take about 5 years to recover just the 401k account balance before market adjustment by the time you average yearly return and adjust for cost’s.

I don’t feel I should tell any man what to do, I can only share my experiences and expertise and the rest is up to you, for the good, the bad or the indifferent.

Now I absolutely agree your dad can buy a duplex, triplex or four unit and work to rehab and improve it over time by buying on a FHA or VA loan with very little down.

Good Luck,