short-term loan from 401k for rehab
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?
