When should your 401k be used for investment down payments

[Desmond Etheridge]

I am interested in buying a multifamily unit in Louisville, KY to begin my real estate journey. I currently own the condo unit I live in, so living in part of the property I look to invest in is not an option. I have been told by lenders that to buy an investment property with multi units will need a 25% down payment. I am considering tapping into my 401k to use for the down payment and maybe having the property put into an IRA. I am looking for advice on when it would make since to use retirement savings for Real Estate.

I understand the power of compounding interest and am concerned that using 20k from the 401k to move towards owning a rental property could be a high risk, high reward scenario. Any financial advisors, experienced investors and investors that have taken similar approches to fund a rental property, please provide insight. The current property I am looking at has details listed below:

Duplex, 2000k sqft.: Both Units 3bd 1ba

Price: 86k

Includes off street parking, separate laundry rooms per unit, separate meters