Taking money out of 457k

[Joseph Ranola]

Hey everyone,

I wasn’t at first, but lately I’ve been extremely interested in taking money out of my 457k (retirement account for city workers like a 401k) to get my first investment property. As far as I understand, due to the pandemic they’re letting you actually take the money out instead of taking a loan against it and a lot of people in my office have taken advantage.

I currently have $75,000 in there and as much as I’ve been wanting to hit $100,000, I would be willing to take out around $25,000 for a down payment on my first investment property in either NJ or PA (would love Florida but I’d rather be closer to my first one).

Being a homeowner in NYC with a wife and one year old as an NYPD Detective, I don’t feel like I’ll amass ~$25k anytime soon, although I do hold a real estate license and have been really focusing on that lately in order to obtain this goal- regardless, it still could be awhile.

In this case, I could have my first investment property much quicker than I originally planned, hopefully before I turn 30 this upcoming March which was always my goal. The way I see it (which I hope isn't tainted by being naive), once I get my first property it's just a matter of time until I can scale it up. Take a HELOC eventually, get another property, etc until it snowballs 10 years from now.

Has anyone done this? Do you recommend taking out 1/3rd of my retirement account or is that crazy (killing my compound interest)? I still have anywhere from 16-19 years to go to build it up as high as possible if I stay until I’m eligible for retirement. I come close to maxing out my contributions every year so I’m putting a decent amount in just for background info. Regardless, I’m just dying for my first investment property.

Sorry for the long read and thank you for any insight!

[Joe Homs]

@Joseph Ranola first of all thank you for your service in these most difficult of times.  I have your back brother.  I would suggest that you first check with @Dmitriy Fomichenko who is the expert in this field.  He may tell you that you cannot do this right now since you are still employed, but please check with him.

Good Investing...