401k or Real Estate?

4 Replies

Hello BP,

I need some direction on what the better use of my money is. Currently I put 10% of my gross income into my 401k and in just a few years I already have 30k in there.  So my question is, would that money be better left alone or should I cash half out to use as a down payment on a rental property? 

Thanks, Steve

Hi Steven, 

this subject has been discussed at length here on the forum with many forks providing their opinions and valuable feedback. I suggest you just search the forum for a post like this.

@Steven Torrez

The best thing to do is to leave your 401k intact and invest other funds in real estate. I personally think that diversification is the name of the game.

@Steven Torrez I would not suggest cashing out your 401k. You are going to take way to big of a hit with the taxes and early withdrawal penalties. Now maybe you should consider saving and investing outside of your 401k till you have enough of a bank roll to invest in real estate.  But you should always contribute to your 401k up to the amount that you maximize your employers matching contributions. (If they have it). That is an automatic return on your investment which is going to be a huge return. Even if they only match as little as 10% up to a certain amount, that is a GUARANTEED 10%. Always take free money when it is available.

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

Lock We hate spam just as much as you

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here