Funding your down payment on first.

[Tom Egelandsdal]

I am considering pulling a 100k out of my 401k to fund a down payment on my first rental acquisition. I live on Long Island so real estate is pretty expensive here. I would like to start with a two family house. Anybody do this and how did it work out? Pros and cons? I am not really concerned about the penalty or tax ramifications. Just curious about other people’s thoughts or experiences with this. I am sure over long haul I can recover the penalties. Also I don’t have any other capital available to invest.

[Tom S.]

@Tom Egelandsdal  Personally I wouldn't recommend pulling because of the penalties.  Can be up to 40% which means you would have only $60k of that $100k to invest.  If you really want to use your 401k, consider a loan which is up to $50k.