Looking to start passive income in rental properties, with $200k in 401k

[Steve Lopez]

Hi, first post.  I am currently employed and make about $90k.  I currently do not own a home.  My wife and I currently rent a home that is owned by my in-laws.  We have 2 kids, one has moved out and the other is away in college.  I don't have any debt other than my daughter's school loans.  I have about $200k in my 401k and would like to use that in buying a rental property.  My goal is to create some passive income so that i can better prepare for the future.  Is this a bad move, pulling from my 401k?

[Nicholas L.]

@Steve Lopez

the problem is that, while RE remains a great investment, it's mostly not an immediate passive income play right now.  you might find something solid and break even for years... so i just don't see how cashing out your 401K would be a good idea (or borrowing against it, not sure which you're thinking of.)  

it sounds like you actually might be in a position to house hack and build some equity while you consider your next move.  i would strongly recommend that.  and i would strongly recommend putting some work in.  some people will look at 4 places and put in 1 offer and get rejected and be discouraged.  so don't be those people.  look at 50 places and put in 10 offers.  get as many rejections as you can.  pride yourself on getting rejected (provided the offers are reasonable, and not just a random lowball that has a 0% chance) and go after something on your own terms.

now, if you want to read about the passive income you WON'T get if you buy 1-2 random properties in a random market, read this thread.

https://www.biggerpockets.com/forums/48/topics/1159104-overl...