Using $$ from IRA as downpayment on a STR?

[Brian Wendel]

I've been considering purchasing a vacation rental property, but I would be using money from my SDIRA account for the down payment in order to get started. It would be an early withdrawal so I know I would be hit with a 10% penalty in addition to being taxed on the money that I would be taking out. I'm looking in very well-established vacation rental markets. I've run various calculations on what the value of my downpayment money would be over a 5, 10, 15, and 20-year period based on just leaving it untouched in the IRA vs. using it to invest in a STR and in almost all cases the STR outperforms, unless it just massively underperforms. Has anyone ever done this before? Just looking to get some feedback from the community on if this is a good idea or not.

[Brett Synicky]

Quote from @Brian Wendel:

I've been considering purchasing a vacation rental property, but I would be using money from my SDIRA account for the down payment in order to get started. It would be an early withdrawal so I know I would be hit with a 10% penalty in addition to being taxed on the money that I would be taking out. I'm looking in very well-established vacation rental markets. I've run various calculations on what the value of my downpayment money would be over a 5, 10, 15, and 20-year period based on just leaving it untouched in the IRA vs. using it to invest in a STR and in almost all cases the STR outperforms, unless it just massively underperforms. Has anyone ever done this before? Just looking to get some feedback from the community on if this is a good idea or not.

 Nope. Set up a checkbook ira or solo 401k and invest in real estate if you want to use ira money. Or as @Nicholas L. stated just save up the money and then do it. Don’t rob your retirement account.