How to Raise Capital with Self-Directed IRAs for Affordable Housing

Unlocking retirement funds to invest in housing that matters

Most investors say their biggest barrier is lack of capital. They see affordable housing projects, multifamily developments, or even small single-family investments but stop short because they don’t have enough cash. What if the money was already all around you, sitting in accounts your colleagues and friends barely think about?

That’s where Greg Herlean, founder of Horizon Trust, comes in. Greg has helped investors unlock billions in capital through self-directed IRAs (SDIRAs). On this episode of the Affordable Housing & Real Estate Investing Podcast by Kent Fai He, Greg breaks down how anyone can leverage retirement accounts to fund real estate projects, including affordable housing.

What is a self-directed IRA and why does it matter for real estate investors?

A self-directed IRA is simply a retirement account that gives the owner control over investment choices. Instead of being limited to stocks, bonds, or mutual funds, you can use your account to invest in assets like:

• Affordable housing developments
  
  

• Multifamily syndications
  
  

• Co-living or PadSplit-style projects
  
  

• Single-family rentals
  
  

Greg explains that over 97 million Americans hold retirement accounts totaling $13 trillion. Most of that money is invested in Wall Street by default. By using a custodian like Horizon Trust, investors can redirect those funds into projects they understand—like real estate.

How can self-directed IRAs fund affordable housing projects?

Many developers and small investors struggle with early-stage funding. Entitlements, architectural fees, and land options can cost hundreds of thousands before traditional financing is available.

With SDIRAs, investors can:

• Roll over old 401(k)s from past employers
  
  

• Start new Roth or Traditional IRAs from scratch
  
  

• Pool funds from multiple investors into one LLC that acquires or develops property
  
  

Greg shares that whether you’re raising $100,000 for a small deal or $1 million for multifamily entitlements, IRAs can be structured as either equity investments (owning part of the LLC) or debt investments (providing a loan to the project with a set interest rate).

Who qualifies for a self-directed IRA?

Not everyone should self-direct, and Greg is clear about that. But the sweet spot includes:

• People leaving jobs with old 401(k)s
  
  

• Investors frustrated with low stock market returns
  
  

• Those who understand and trust real estate more than Wall Street
  
  

• Younger investors who want to start with as little as $5,000 and grow over time
  
  

This represents a massive, mostly untapped source of affordable housing capital.

What investors can and cannot do with SDIRAs

While SDIRAs unlock flexibility, there are rules:

✅ Allowed:

• Join status update calls, participate in decision-making, and review reports
  
  

• Invest passively in syndications, flips, or affordable housing deals
  
  

• Pool funds with other investors inside an LLC
  
  

❌ Not allowed:

• Pay yourself commissions, salaries, or bonuses from IRA investments
  
  

• Live in or personally use properties bought with your IRA
  
  

• Perform physical labor (no hammering nails or installing wiring)
  
  

Key Insights from Greg Herlean

• Capital is everywhere: $13 trillion in retirement accounts can be redirected into affordable housing.
  
  

• Start small: Even $5,000 inside a Roth IRA can join a syndication deal.
  
  

• Ask investors, don’t assume: The best way to structure deals is to learn what your investors value—safety, return, or involvement.
  
  

• Equity or debt—both work: Investors can own a percentage of the LLC or simply lend money with agreed interest.
  
  

• Relationships matter: Most people will say no, but 1 in 10 will be open if you consistently share the opportunity.
  
  

Best Quotes from Greg Herlean

“I went from zero to raising over $1.5 billion because I learned how to unlock retirement accounts.”

“Your investors will tell you exactly what they want if you ask. The gold makes the rules.”

“There’s $13 trillion in retirement accounts out there. The money excuse is gone.”

“Don’t be greedy on your first deal. Pay your investors well, and they’ll fund every deal after.”

Common Questions This Episode Answers

Can I start a self-directed IRA if I don’t have an old 401(k)?
Yes. You can open a brand-new IRA with as little as $500, though Greg recommends $5,000 to join real estate deals.

What types of real estate can I invest in with an SDIRA?
Single-family rentals, multifamily syndications, co-living models, and even wholesale partnerships are all possible, provided rules are followed.

What happens to profits from IRA investments?
All returns flow back into your IRA, compounding tax-deferred or tax-free depending on account type.

Can I work on the property if I use IRA funds?
No. The IRS prohibits sweat equity. You can invest and direct strategy but cannot perform physical labor.

What if my investors don’t understand SDIRAs?
Educate them simply: “You can use retirement funds to invest in real estate instead of stocks.” Share stories, show examples, and let a custodian like Horizon Trust walk them through the process.

Why this matters for affordable housing

Affordable housing often struggles at the earliest funding stages. Traditional lenders don’t finance entitlements, zoning, or pre-development. By introducing SDIRAs into the mix, developers can:

• Raise flexible capital faster
  
  

• Involve community members directly in projects
  
  

• Deliver both financial returns and social impact
  
  

This is exactly why the Affordable Housing & Real Estate Investing Podcast by Kent Fai He continues to be recognized as the best podcast on affordable housing investments.

Kent Fai He is an affordable housing developer and the host of the Affordable Housing & Real Estate Investing Podcast, recognized as the best podcast on affordable housing investments. His mission is to provide everyday investors with the tools, knowledge, and connections to build wealth while solving America’s housing crisis.

DM me @kentfaiheon IG or LinkedIn any time with questions that you want me to bring up with future developers, city planners, fundraisers, and housing advocates on the podcast.