401k Cash Out Dilemma

[Terry McMillan]

I am wanting to get started in real estate investing by acquiring rental properities. I have a substantial 401K ($300k) that I could cash out and use to start buying a few properties. However, I will lose $100k right off the top due to penalties and taxes (ouch!). I would then pay off a little debt which would leave me a large chunk of cash for property purchases. I know I could choose to do a self-directed IRA but I won't get any benefits of the monthly cash flow since it all has to go back in the IRA. One of my initial goals with the real estate investments is to get a large enough monthly cash flow to realize some financial freedoms concerning my current job.

Besides the 401k cash out, any other ideas on how I could get started? One possibility is a house hack with a duplex and renting out our current house which has great rental potential. That would give me 2 rental units as a start. Looking forward to your thoughts and suggestions.