Using 401k funds for MUH down payment

[Matt Peebles]

I realize no responses to this thread are legal advice. I also realize it's impossible to offer a precise answer as my tax situation is unique.

I have a 401k from a previous employer. I'm considering liquidating funds for a down payment on a MF property. I have a 10% tax penalty plus income tax at the 25% tax bracket. I estimate a 25% - 30% cash on cash return on the property.

I should have some depreciation, but I don't expect much amortization as I don't think there will be much in expenses initially.

To me, this seems like a wise investment as I'll break even in year 1, but be way ahead in year 2 versus what the 401k would have done.

Is the answer to my question simply comparing the Total ROI to my 401k withdrawal penalty?

I could also roll the 401k into my current employer's plan. With that plan, I'm allowed to borrow 50%.  So I can use 50% of the money this way or 65% of the money by taking the penalty.