401k loan for investments
Hello all,
I'm looking into purchasing a rental property, more than likely using a BRRRR type strategy where I refinance after repairs are done. However, I was wondering if anyone has experience utilizing a 401k Loan to either fund the loan or down payment? My employee 401k program offers a loan at 6.75% that would be paid back in after tax income from my paycheck. I would likely just utilize this loan as short term financing and pay it back after the refinance so I won't lose much on compound interest in my investment account. If anyone can tell me if this is a ridiculous idea or not I would appreciate the input.
Most Popular Reply
@Austin Suddreth I think we all just got an education in 401k borrowing from @George Blower - thank you!
I have successfully borrowed against my 401k many times to purchase a property then BRRRR to get the money back. Some people don't like borrowing against their 401ks because of the drag on returns BUT with a 5-7% interest rate, it's hard to beat. And you're paying that interest back to yourself in your 401k, not to a lender.
Best of luck!