How to use money from my 401K to fund my first purchase?

[Faustino Ramirez]

Hello,

I have 260K in my current employer's 401K and I want to start investing in multifamily buildings for passive cash flow. My goal is to replace my W2 income (5K) with passive cash flow from real state investments as quickly as possible. I would like to purchase a multi family turn key property in the Memphis, TN area.

Any Ideas on where I can start?

Please advise.

Thank you,

Faustino R.

[Steve Kontos]

@Faustino Ramirez

I am going to go against the grain here and just give my two cents.  If you are just starting out in real estate I would NOT use your 401k as a form of leverage.  Reason being you are still brand new (I'm assuming based on your writing "start investing") and mistakes will be made.  Instead here is what I would say:

In today's markets there are various ways to leverage.  I believe the fact that you are entertaining this form of leverage means you have a basic idea that there are other ways to raise capital.  I would implore you to find another way first.  Once you have several real estate deals in your pocket, then go leveraging that 401k.  At least at that point you will have experience and you will be BETTER equipped.