401k Withdrawal to start RE investing

[Justin Shepherd]

Hey everyone! I am new to real estate investing and wanted to run something by you. I am not set on it, but have considered making a 401k withdrawal to start investing in real estate. I own my house currently, but hesitate to tap into the equity as I do not want to mix my personal residence with potential rentals. 

What are your thoughts on making 401k withdrawals to get the cash needed to start? Thank you!

[Corey Kenney]

@Justin Shepherd

In my case there is a difference between a distribution and a loan. I have no problem borrowing from myself and paying back myself if that’s what it takes. If you take a distribution you pay tax and potentially a penalty..(Cares Act aside) if you take a loan out,you pay interest. There’s no penalty with the loan and as long as you make your payments as agreed, you put the money back either way in a worse case scenario. If I successfully execute a RE transaction I should be able to pay off what I borrow anyway but that’s just a bonus. I had to make a decision about what mattered most to me. If you have dedicated your life to getting educated about real estate like I have then you should see how your money sitting in a 401 is an easy opportunity to get started. I want a better life now for my family, not a more secure life for myself in my golden years. I want to build generational wealth and develop knowledge that I can pass on and then I will know that my addiction to RealEstate was part of a bigger purpose..

I will know why podcasts have completely replaced music in my life..

Just my opinion