@Jash Sayani Actually, there are companies which specialize in setting up SelfDirected IRAs which can be used to fund Real Estate transactions directly and not as a loan from your 401K. An LLC would need to be setup to isolate the owner from the transactions, but the owner still directs the "business" and makes the decisions. Additionally, you may not be able to convert a 401k with a current employer. This depends on the rules of your current 401k program. A 401k from a previous employer which is separate from the current one can be converted without a problem though.
One thing to note though, you mention using the IRA as a "down payment". Obtaining a loan to fund the remaining portion of the transaction within this environment is a bit different. You cannot obtain a "normal" mortgage. A Non-Recourse Loan needs to be obtained and these are a bit different in that a higher down payment is required as well as a higher interest rate. Additionally, the use of a Non-Recourse loan makes a portion of your "profits" subject to a UBTI (Unrelated Business Taxable Income) tax from the federal government. I have been considering this method of funding for a portion of my Real Estate investments and do not know much more about it, but be sure to investigate it thoroughly before acting.
