Pull retirement for RE investing?

3 Replies

My wife and I own a couple rentals, my partner and I own a few rentals as well. We are BRRRR ing our first property and I really like the strategy. I’m curious how people here felt about pulling from retirement accounts to dump into real estate? I know all the penalties and tax issues, I still think it’s worth it in the long run but was wondering other people ideas on it.

The majority will say to never touch your retirement and I'm with the majority. The penalties to me is just not worth it. Granted The 401k I do have is getting me somewhere around 8% so its doing well enough that its worth keeping in there. Its tough not to touch it though. I got enough for a very nice down payment. Personally I think the risk is not worth it, especially on your first property using a new financing method (BRRRR). Once more experience I think I would be more open to it, but that just me. I know there will be people who say to do it in a heart beat. So I'm sure youll meet both sides here.

You can always look into self directed 401k/IRA if you have some from a former employer. @Dmitriy Fomichenko can answer any questions on that topic for you. 

@Nik Moushon thank you for the mention!

@Benjamin Voorhis I completely agree with Nik, taking early distribution (which might cost you as much as 50% of the amount you pull out) would be unwise. Instead you can convert your retirement into self-directed IRA or truly self-directed Solo 401k plan (if you qualify) and have total control how those funds are invested. You can invest in alternative assets such as real estate, private lending, private companies, syndications and so much more, while enjoying tax-deferred growth of your wealth. 

@Benjamin Voorhis

While you can find some people on here who will tell you to eat the taxes and penalties to invest into real estate, it flies in the face of conventional wisdom to do so. I prefer real estate to traditional assets too, but with self-directed accounts and participant loans from Solo 401ks, there are some great alternatives to taking an early distribution.