Despite what many nay sayers may tell you, buying properties with your 401k is possible. It is not as easy as purchasing mutual funds or shares of stock but you can invest in properties with your retirement account. If you want invest in real estate you can purchase property in full or in part and these options have their own pros and cons.Buying real estate with your 401k can be difficult depending on the amount of liquid assets in your account. Regulations limit the amount of funds you can withdraw and it often comes with penalties, reducing the total amount further. While this amount can restrict your estate purchasing power, there are options. You can pool your resources with other investors, use the funds as collateral for a larger loan, or you can barter with the seller to lower the price. These options would allow you to purchase the property outright or have a large interest in a commercial venture. Besides the outright costs, another downside to this type of investing is that you also have a larger share in the headaches of property management, something some investors have little or no interest in.If you are not interested in investing that much time and money in properties you can become a partial investor in real estate. Real Estate Investment Trusts (REIT) are corporations that specialize in purchasing property and holding commercial mortgages. These corporations then sell shares of stock that investors purchase, thus enabling them to obtain estate with reduced cost and risk. While the rate of return is high for this type of investment, not all 401ks allow this type of investment. You will need to check with the manager of your 401k to find out if yours allows this type of non-standard investment.Buying properties with your 401k is possible, however it can be difficult. Depending on how much money you are looking to invest and how involved you want to be in real estate, your 401k may not be a viable option. Looking for other ways to invest in real estate or rolling your funds into an IRA may be better ways to increase your investment in the real estate venture. It all depends on your retirement goals and the advice of your financial advisor.