should i cash in 401k money to buy real estate

[Carlos Silva]

My wife and I currently have  2.5 million in single family real estate.  we are wanting to buy the land, build the building, and open a fast food franchise.  

My question is should we use our old 401k plans.  is taking the penalty of 10% worth it.  we currently have 450k in 401ks.  we can offset the income with our FFE purchase.

Thoughts?

[Ray Johnson]

I'm not sure what the $2.5 million in SFR real estate equates to, If you're in certain parts of California, it could be one or two properties leaving no room for alternative plans, however if it's in the Mid-West it could be 10-15 properties with room to sell a few and do your project. I would not recommend using your 401K to cash-out for the project. try using your 401K as collateral/leverage for any new loans to do the project and save yourself the 10% penalty, and tax hit.