Rolling over a spouse's 403(b) into a self directed IRA

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My spouse has about $30,000 in a 403(b) from a school system that is no longer an employer. He is almost 50 years old. We would like to use the money for investing in property. My question is whether it would be better to pay the 20% penalty on this modest savings and keep the cash or roll it into a self directed IRA? My understanding is that the rollover amount would also be taxed if we went with a Roth IRA but the Traditional IRA has tax and other disadvantages of its own such as the minimum disbursement requirements.

Any insight about this situation would be appreciated!