Taking Out My Roth IRA Contributions for Real Estate

[Steven May]

Lately, I've been thinking a lot about lifestyle choices and my future as a entrepreneur or investor. I have heard it referred to as "Entrepreneur Bipolarism" -- where the mind is constantly battling itself on what is the best next step to advance one's portfolio. So, what other place then to ask the common people of BP forums. 

For a quick background -- I am a 24 year old registered nurse who and am taking my realtor exam next month for the state of Missouri. I currently own 2 properties in KC, MO. One is a rental that brings in about 200$/mo cash flow. The other is my personal residence that I have about 25-30% equity in and am thinking about taking a small HELOC against.

The stock market has been on quite a volatile ride lately and my portfolio has done well since I grabbed some more ETFs at the bottom a few months ago. Yet, I wonder -- do I want to wait until I'm 60 years old to enjoy those gains. 

My interest in real estate investing comes from the ability to create a financially free lifestyle. Rather than compounding effect of a Roth IRA and waiting to enjoy the funds later in retirement. So I have been contemplating the process of pulling just my contributions from 2019 and 2018 out to go and buy another property along with the capital I have in my checking account already along with a possible HELOC against my personal. (Pulling out just contributions to avoid major penalties) I would also lower my monthly contributions quite a bit in my Roth going forward as well.

Goals of mine are NOT to have 100 units but rather to obtain roughly 6-7 units that I can then begin to pay down aggressively to own free and clear one day. I also strive to be financially free by 35. The fear comes that I could find myself in a few years with a very small "traditional" retirement fund such as a Roth IRA or 401k.

As a 24 year old looking forward, who out there has had success in strictly investing in real estate and how comfortable are you in being "asset rich and cash poor"? 

Thanks for reading and look forward to the feedback.  

[Jaysen Medhurst]

I think the first step, @Steven May, is to get clear on what "financially free" actually looks like. How much income would that require each month? Is that a number for a single 24-year old? What will that number be when you're 45 and have 2 kids?

Now work backwards. How many units is that?

Why the focus on "paid-off" properties? This may feel "safe," but is often not the best use of your capital. There is a lot of power in responsible leverage.

Lastly, if you're making enough rental income to sustain a comfortable lifestyle, why would that be considered "cash poor?"