Skip to content
Two investors reviewing resources on a laptop

Get industry-leading resources — for free

Unlock resources for every investing strategy and stage with a free account.

By continuing, you agree to BiggerPockets LLC's Terms of Use and Privacy Policy

Followed Discussions Followed Categories Followed People Followed Locations
Buying & Selling Real Estate
All Forum Categories
Followed Discussions
Followed Categories
Followed People
Followed Locations
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback

User Stats

205
Posts
105
Votes
Gary Parilis
  • Rental Property Investor
  • NJ and PA
105
Votes |
205
Posts

short-term loan from 401k for rehab

Gary Parilis
  • Rental Property Investor
  • NJ and PA
Posted

I'm investigating various options for short-term cash for rehabs. A loan for 401k looks like a good option. Any gotchas to worry about? 

Below are the rates charged in one of my accounts (Fidelity). As I understand it, at any moment, the outstanding loan principle is deducted from my investments (I assume proportionally across all funds), so if I borrow $20k, that is no longer earning in my portfolio. But that's OK, because my 401k is earning 9.325% on the loan (more than it would earn on average in a typical stock fund). And for me, the real estate investor, this is cheaper source of capital than a typical private loan or hard money.

Anything wrong with my reasoning? 

Loading replies...