401k withdrawal without penalties?

[Antonio Salgado]

Hey everyone. So I know this question has been posted before but here we go -
I’d like to cash out my nyc TDA account. It’s like a 401k.
I no longer work for the city. I have 98k. I could do a loan for 50k. If I cash out I’ll pay 28% plus 10% penalty... yikes! I’m looking to use it to buy a vacant lot. A hard money lender will provide the rest of the funds to build a 2 family house that I will hold and rent out. How can I offset the tax? Can cost segregation help me? I do not want to own any property in a self directed 401k because I want to take depreciation and receive cash flow from the rentals. 

[Frank Maratta]

@Antonio Salgado

I would take the loan out as someone else mentioned. I did this.

If you can’t afford the monthly payments then building a two family is probably not the best option here. You are going to have months of no rental income until the property is built and then finally leased out. Sounds like you need something already ready to be put in service so you can start collecting passive income.

Why are you building from the ground up? It’s usually cheaper to buy then build. And if you were to build, there are economies of scale here- in other words let’s make up some numbers and say a two family house costs $250k to build- that’s $125k a unit. A three family might not cost that extra $125k to put a third unit on, you could build it for less, and a six family might get you to $110k/unit.....Doesn’t sound like going bigger is an option for you if you don’t have the money, but this is what I would do if I built.