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!