Liquidating one 401K to enable borrowing from other 401K??!!

[Gregg Pauly]

Hey there everybody.   I'm trying to come up with money so I can put some "skin in the game" for a first real estate investment.  My current income is spoken for being that it goes to family expenses.  I know private loans are an option.  However, networking to meet those that may be able to help via REIAs is difficult due to scheduling (my wife and I both work at night).   Pulling money out of our current home is not an option [insert sad face] because we own it due to my wife being the primary bread winner and, at least at this point, support for RE dreams is tenuous.

So, I have two 401Ks that I'm thinking may be a possible source of funds. My concern about the scenario I'm about to describe is that it may entail being hit with taxes / fees on my joint tax return, thus effecting my wife's finances and, as such, increasing her weariness of REI as a whole.

The situation:  I have a 401K with my employer that I am currently not contributing to (not savvy, I know...just what it is for now) that is vested at $42K.  I currently have a loan out on this 401K for $12.5K on which I still owe just under $11K.      I have another 401K from a previous employer that is sitting around not doing anything that is vested at $14K.     My thought on pulling out money from this whole situation is that I could completely liquidate my $14K 401K and accept state and federal taxes and fees equaling anywhere from 26-36%.  If I did that, I'd be left with $9K-ish, should all 36% be deducted.  I would then take the $9K, add $2K of personal money to it, to then pay off the difference of the 401K loan I have.  Once that loan is paid off, I would then qualify to, once again, take a loan out from the same $401K for up to 50% of the vested amount - receiving roughly $20K.  I would then use that $20K as my "skin in the game" and, over the next several RE deals, use a portion of proceeds to as-quickly-as-possible repay the current $401K loan.

Having said all that, come tax time, how should I expect the above scenario to effect my tax return.  We generally have money returned to us after filing taxes and I'm wondering if my "creative financing" could potentially ruin any chances of getting a return and, more importantly, will my wife kill me afterward??!

Thank you for baring with me on all this.  Any feedback would be gratefully and humbly appreciated.   Numbers are not my forte and I don't have an accountant that's real estate savvy yet.  Thanks everyone!