Grant Cardone Says Use Your 401(k) to Buy Real Estate. A CFA Says Don’t.
You’ve probably seen the clips, Grant Cardone or someone similar pacing on stage, telling you to pull money out of your 401(k) to buy real estate.
He makes it sound bold. Like you’re taking control. Skipping the banks. Doing what the wealthy do.
But here’s the thing. It’s not bold. It’s reckless.
When you understand how retirement accounts actually work, and what you lose by forcing real estate into one, you see this strategy for what it is. Risky. Expensive. Completely unnecessary.
I’m a CFA who actually retired early. I didn’t touch my 401(k) to build wealth through real estate. You don’t need to either.
Let’s walk through why it is a bad idea to buy real estate with a 401k, why his advice fails, and the alternatives.
If you’ve ever been tempted to touch your 401(k) to buy property, read this first.
Table of Contents
Why Listen to Dad is FIRE?
I’m a CFA who actually retired at 42. I’ve held FINRA licenses, built portfolios, and have owned rental houses more than half my life.
Part of my career was managing an Investment Risk team that reported to the Chief Risk Officer at one of the country’s largest Financial Services Firms.
One of my responsibilities was identifying investment strategies that were not worth the risk.
In my expert opinion, Grant Cardone’s strategy of using your 401k to buy real estate is not worth the risk.
Related: Should I Max Out My 401k? A CFA Who Retired Young Answers
Why Not Listen To Grant Cardone For Investing?
Cardone isn’t a licensed advisor. There’s no evidence he’s registered as a fiduciary, which would require him to prioritize clients’ interests legally. Think about that.
He’s just a guy in a suit telling you to send your retirement to him, then charging layers of fees. That’s not wealth-building for you. That is wealth-building for him. It’s also selling hype.
Cardone initially built his fortune through sales training programs. He is an expert on sales.
There are better, faster, safer ways to build real wealth without risking your 401k to buy real estate.
Related: If You Say “Not Financial Advice,” Maybe You Just Should Give Better Advice
Can You Really Buy Real Estate with a 401(k)?
Technically, yes, you can own real estate inside a self-directed IRA or solo 401(k). That opens the door to investing in real assets instead of just stocks and bonds. Sounds empowering, right? That’s the pitch.
But what they don’t tell you, especially people like Cardone, is that these setups come with strict IRS rules, zero flexibility, and a mountain of paperwork. This wasn’t designed for everyday investors.
It’s a loophole wrapped in restrictions, and most people aren’t ready for what it really involves.
Related Video: I Am a CFA. I Believe Grant Cardone Gives Horrible Financial Advice
Who Is This Strategy For?
Before I cover all the reasons why buying real estate with a 401k is bad advice, I want to acknowledge that for some people, it may work.
Cardone’s 401(k)-to-real-estate play might work for high-net-worth folks with maxed-out retirement accounts, deep market knowledge, and a stomach for risk.
If you’ve got cash to cover property costs, can handle IRS red tape, and don’t need liquidity, it could fit.
But for most? It’s too complex, too rigid, and too risky. You’re better off building wealth outside retirement accounts than gambling your future on this.
Related: Why Buying a House is Financially Better Than Renting (Includes Calculator)
Why It Doesn’t Work: Real Estate Isn’t Cheap, And Retirement Accounts Aren’t Built for That
Buying real estate through a retirement account means you need serious cash inside that account. Traditional mortgages usually aren’t allowed, and the ones that are tend to be rare, expensive, and extremely limited.
That leaves you needing to pay in full. An exception is if you get a Non-recourse loan, which are harder to get and come with higher rates.
For most people, there’s simply not enough in the tank. Retirement accounts grow over time, but unless you’ve been maxing out for years and catching big returns, dropping hundreds of thousands on a single property can leave your account dangerously thin.
Real estate isn’t a stock, you can’t sell a corner of it when you need a little cash. Once the money’s tied up, it’s stuck.
Related: Best Mortgage Term for Investment Property
Why It Doesn’t Work: Every Expense Must Come Out of the Account
This is the part most people find out too late. When your IRA owns the property, every penny tied to it, repairs, property taxes, insurance, HOA dues, must be paid using the money inside that same account.
You can’t use your checking account, credit card, or even a loan to cover anything related to the property. If there’s not enough cash in the account? Tough luck. You’re either stuck trying to liquidate other assets to cover the costs or watching the deal fall apart.
You also can’t mix funds or reimburse yourself later. It’s a tight box, and once you’re inside it, every bill becomes a potential landmine.
Related: How I Bought Homes With Little or No Money Down (And How You Can Do It Too)
Why It Doesn’t Work: You’re Not Allowed to Do the Repairs
Got tools? Great. Keep them in the garage. If your retirement account owns the property, you’re not allowed to fix the sink, replace the drywall, or mow the lawn.
If you buy real estate with your 401k you’re considered a disqualified person. This means any labor you provide, free or not, can void the entire account’s tax status.
So even if you’ve got the skills to handle small jobs, you’ll be forced to pay someone else. That turns a DIY-friendly investment into a hands-off money drain. And if you’re thinking no one will notice, think again.
One mistake, one receipt, one wrong move, and you could be looking at penalties that wipe out any gains you hoped to make.
Related: 14 Common Renovations That May Hurt Your Home’s Value
Why It Doesn’t Work: You Lose Tax Breaks Like Depreciation
One of the biggest perks of owning real estate is the tax treatment. Depreciation, mortgage interest, repairs, all of it can offset income and boost cash flow. But once the property sits inside a retirement account, those tax breaks disappear.
The IRS already gives your IRA or 401(k) tax-deferred or tax-free growth, so it doesn’t double up. So if you’re planning to use depreciation to reduce your tax bill or write off that new roof, forget it.
Inside a retirement wrapper, those strategies don’t apply. It’s like buying a high-performance car and agreeing not to use the turbo. You’re left with the cost, but none of the benefits that make real estate such a strong long-term play.
Related: Give Yourself A Gift In Tax Season Instead of Uncle Sam: 18 Top Tax Tips
Why It Doesn’t Work: You Can’t Live in It or Rent It to Family
This is where it gets ridiculous. If your 401(k) or IRA owns the property, you can’t use it. Not for vacations, not as a backup plan, not even as a rental to your own kid.
The IRS calls this a prohibited transaction, and breaking that rule can blow up your whole account.
And it’s not just you. Your spouse, parents, children, and even some in-laws can’t touch it either. You’re not just buying an asset, you’re buying a property you can’t enjoy, can’t live in, and can’t let anyone close to you use.
If that sounds like a good deal, you’re missing the point of real estate in the first place.
Related: 19 Ways to Make Money in Real Estate Without Owning Property
Why It Doesn’t Work: You’re Putting Too Much Into One Property
Most real estate inside retirement accounts is bought outright, in cash. That means dropping hundreds of thousands into a single property and losing the ability to spread your bets.
In the investing world, that’s called concentration risk, and it’s dangerous.
If that one property underperforms, sits vacant, or tanks in value, you’re out of options. Retirement money should be working efficiently, with flexibility and balance.
Putting it all into one door, one roof, one zip code? That’s not smart investing, that’s gambling with your future.
And the worst part is, you lose liquidity. You can’t just sell a bedroom when you need cash. You’re locked in, and the stakes are high.
Related: 25 Investment Lessons Seasoned Investors Wish They Learned Sooner
Why It Doesn’t Work: RMD Rules Make Things Complicated Later
At age 73, the IRS starts forcing you to take required minimum distributions from your retirement accounts. Stocks and bonds are easy, you sell off what you need and withdraw the right amount. But what do you do when part of your IRA is locked up in a house?
Now you’re dealing with annual appraisals, trying to assign fair market value to a property that might fluctuate wildly year to year. If your house appreciates, your RMD goes up.
If you don’t have enough liquid assets to meet that requirement, you might be forced to sell, on the IRS’s schedule, not yours. It’s messy, and it puts you in a corner just when you should be simplifying life.
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Why It Doesn’t Work: It Adds Rules, Paperwork, and Zero Flexibility
Real estate inside a retirement account doesn’t come with the same freedom as owning it on your own. Everything needs approval, paperwork, custodians, and compliance.
You’ll need a separate bank account tied to the IRA, formal processes for every expense, and zero involvement in the property’s upkeep or management. One misstep, and the entire structure could collapse under penalties and back taxes.
What’s supposed to be passive income turns into a full-time administrative chore. You’re not just buying a property, you’re signing up for an ongoing legal and tax balancing act. And unless you love forms and restrictions, that’s not the kind of retirement you’re trying to build.
Related: 12 Costly 401k Mistakes Most People Make, According to a CFA
Why It Doesn’t Work: You’re Betting Your Retirement on a Sales Pitch
When you pull your 401(k) to invest in real estate funds like Cardone’s, you’re not just buying property. You’re handing your future to a guy who’s not accountable.
Cardone Capital’s fees, think 2% management plus profit cuts, eat into your returns while your money’s stuck in illiquid assets.
He’s not a fiduciary, so he’s not legally bound to prioritize you. His game is raising cash, not safeguarding your retirement. X posts rip into his high fees and murky deals, and even his fans admit the “passive income” isn’t guaranteed.
Your 401(k) is too critical to bet on a slick pitch from someone who made his money by selling what a great salesman he is.
Related: 13 Bad Financial Advice You Should Ignore, From a CFA Who Retired Young
There Are Better Ways to Buy Real Estate Without Touching Retirement
Here’s the part no one tells you: you can get into real estate with little or no money out of pocket, without ever cracking into your 401(k). FHA loans, VA loans, seller financing, partnerships, house hacking, HELOCs, there are options if you take the time to learn the game.
I did it. Others do it. And it works. Pulling money out of your retirement account isn’t a shortcut, it’s a setback. Real estate is powerful, but only when it’s structured right.
Don’t sabotage your future just because someone told you it’s “your money anyway.” It is. So treat it like it matters.
Related: How I Used Real Estate to Retire at 42 (And Believe It Still Works)
Should You Use A 401k To Buy Real Estate?
Let me make it clear: it just isn’t needed. You can buy houses with no money down and leave your retirement account alone.
You don’t need to touch your retirement account. I didn’t. I bought my first rental at 21, stacked a few more, and never once dipped into my 401(k).
The result: I became a liquid millionaire at 38. I then retired at 42. I could not have done that had I listened to Grant Cardone’s advice. Instead, I would have paid him for the things he sells.
Related: How to Get The Lowest Mortgage Rate (Even If People Think Rates Are High)
Keep Your 401(k) Focused on What It’s Built For
Using your 401(k) to chase a house might feel like progress, but it’s not wealth, it’s a liability in disguise. Retirement accounts are meant to grow quietly in the background while you build smart plays in the real world.
Real estate is a great tool, but only when it’s structured cleanly and keeps your options open. Mixing it with retirement money just adds rules, risks, and red tape that most people aren’t ready to handle.
Don’t fall for the hustle-speak that tells you to break what’s already working. Play it smarter, and let your 401(k) do what it was made to do, buy you freedom later.
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