The “Silver Wave” is surging through the United States, and more people are preparing to enter retirement than in previous years. However, unlike previous generations, the latest group of retirees are looking to make the most of their golden years, and part of that plan is making their money work for them. People are leveraging their retirement funds for commercial real estate investments to not only generate extra income, but to build generational wealth as well.

The Employee Retirement Income Security Act

In 1974, the Employee Retirement Security Acts (ERISA) was passed. ERISA was designed to protect the assets and holdings of retired workers, and prevent financial and retirement plan managers from misusing the funds that workers paid into their accounts. While the particulars of ERISA are very complex, the main thrust was to give American workers more security and autonomy over how their retirement funds were handled. Part of ERISA is focused solely on investments. Many people already know that retirement funds can be used for investments in stocks, CDs, and mutual funds. However, one of the most overlooked aspects of ERISA is that retirement funds can be leveraged for commercial real estate investments that generate additional income.

Retirement Funds and Investment Properties

Financing property investments by leveraging your 401(k) or other retirement funds opens up a world of opportunities. People can use their retirement accounts to purchase rental properties, commercial space, homes for fix and flip projects, and even raw land for future developments. This allows people to create additional revenue for themselves to spend or to accumulate so they can pass it on for generations to come.

Guidelines for Financing Commercial Real Estate

To leverage retirement funds for commercial real estate, a person cannot be employed by the company that provides their retirement benefits. This also means that people who are not yet retired can also leverage their 401(k) accounts and similar retirement plans for investment properties, provided they are either self-employed or hold roles with employers different from the company that contributes money toward retirement. There are a number of fine points laid out in the Employee Retirement Security Act, and it helps to have professionals who understand commercial real estate financing to provide guidance and assistance. At The Capital Rams, we offer 401(k) and retirement plan financing for commercial real estate. Contact our offices today to learn more.