401k loan request for investment property
Hello everybody!
Just purchased my first investment property which leaves me low in cash. My agent sent me another duplex property that has potential but i am currently low on liquid cash. I was planning of getting a 401k loan ($15k) for a downpayment. Is it a good idea? What do you guys think for this situation? Thank you in advance!
Most Popular Reply
Alejandro,
I have done this before to come up with cash for a down payment. It's a great option so long as you aren't planning to leave your job anytime soon. If you were to take out a loan for 15k and then leave your employer, you'd likely be responsible for paying off the loan within a short period of time (60-90 days is probably standard). Also consider the tax implications, as you'll be repaying that loan with post-tax dollars, and then you'll get taxed again once you are eligible for withdrawals.
All that being said, I think it's a fantastic option. Doing this would also protect you in the event of a stock market downturn (your portfolio would feel less of an effect since the total holdings are lower).