Javon,as George mentioned if you take early distribution from your 401k - you will lose good chunk of the balance to taxes and penalties.

“But we’ve got the best balance sheet, the lowest debt ….

You are an inspiration...how'd you manage the kid/work balance?

There is a huge difference between (1) buying a performing, low interest rate note at a significant discount to principal balance, (2) making a private or hard money loan at a high rate of interest and (3) buying a note that is in default.  

It works in the format that they owe you money on an account balance, whatever money they owe they can pay it, if they don't pay it, any account credits/prepaid rents or security deposits go towards that balance.

If the loan balance is too high - close to or more than the property is worth - this strategy doesn't really work.

All of those features help make sure things are done properly, create innate checks and balances, protect investor capital and will act as a sale pitch in a sense when marketing the fund.

For example:purchase price: 100kDP: 20K (entirely from 401k loan)Loan Amt: 80K401k loan: 30Kcontingency REI acct: 10K (balance left after DP)rental income: $1,100P&I: $360401k repayment $546= nil to slightly negative cash flow during the repayment of the 401k loan (I assume I can repay this much sooner than the term since essentially rental income would be it down.)Is it possible to "season" the 401k loan funds so that disclosure is avoided.

My original offer was to take the loans subject to and pay the small balance in cash.

It has the following details which I think would make it ideal for an investor:The seller of the note is investor friendlyThe property has 200K equityProperty is almost fully leased and cashflowingThe owner of the building is cooperative and willing to negotiate.The current balance on the note is 572K and it is being sold for 390K with financing possibleIf you or anyone else is interested please contact me and I can send more details.Thanks