Can you take 401k loan to buy rental property?

[Dustin Wright]

I have found an REO property for 29k. It would make a great rental property with minimal work. I have been considering a 401k loan since it would be so hard to get a traditional mortgage for this amount. Is this allowed? My plan allows me to pull 50% of my vested balance and I would be able to cover the entire purchase.

I also wouldn’t want that much sitting out of the 401k not growing for an extended period. So if it is allowed would it be smart to pull the equity out at some point to repay the 401k loan sooner?