Cashing out 401k for rental

[Jason Young]

Hey BP fam,

Hoping to reach some savvy investors with this question. So I decided to close my old 401k from a previous company. I was going to move it into an IRA.

When I talked with my IRA rep he says I shouldn't have gotten the checks sent to me directly but instead sent to them so it rolls over and I don't get hit for taxes.

Well it was too late and the checks came anyways, which they say I can just shred them and do the rollover correctly and not take the tax hit.

This got me thinking though. I see on the checks how hard I would get hit by the taxes (not too bad).. some were Roth and some traditional so I did already pay into the Roth taxes. The net amount leaves me enough to be able to buy some property in cash, albeit.. something modest but still property that I could rent out and have it start paying me back now and into retirement. 

Other than the tax hit, am I missing something? Am I the only one that thinks this is a good idea? I’m 42 so retirement is still a ways off.. I wouldn’t be able to see that money until then anyways. If i use that money now.. that same money could be paying me back now and into retirement, all while hopefully gaining in property value.

The only other problem is this is the bulk of my retirement. I have other 401k’s with my new company, but nothing close to this amount. But I’m not so sure I trust this money in the stock market anyways. It took me 20 years to accumulate that and if I use past performance to guess at the future value... it doesn’t look good. Those mutual funds are a crapshoot anyways. 

I know this is a little off topic but I do want to get another rental and I’m not really interested in going the SDIRA route. I’m just thinking this could easily make me $1k/month now and for years to come and into retirement. Hell by then it would probably make me $2k a month after all expenses. Just figuring $1k/month net over the next 20 years is $240k. Why get paid back in retirement later when it could start paying me now... and then..?

Thanks,

Jason