Should You Cash Out Your 401k to Buy Real Estate?

Should You Cash Out Your 401k to Buy Real Estate? One of my favorite strategies for purchasing cash flowing real estate is taking a loan from my 401k plan.



  • This is an older video and you have more vids on SDIRA now. Do you still think it's a good idea to cash out your 401k to invest in real estate? Is it more situational? I'm interested in starting to invest and possibly use my 401k either cashed out or SDIRA.

  • Would love to take out money so I send to Kenya for my retirement home… how about 401b(3)

  • Oh my gosh thank you for your words I’m about to buy a property with for rental units in Indiana where I’m from and I was struggling to gather the 20% required and now I know where to get it considering my income will increase in the future and I thought I was out of options

  • I recently pulled money from 401K in order to pay off our house mortgage. After watching this video I'm not sure if we would be better investing this money in other properties or paying off our home? An advice would be highly appreciated….

  • Why is it that every ad now is some doosh bag trying to sell me their get rich quick scheme?

  • Thank you. You answered my question.

  • If you take/withdraw money out of your 401k, yes there will be a 10% penalty fee but there is more to it. You’ll also pay capital gains tax, assuming if accrued interest and grew, and that money withdrawn will most likely put you in a higher tax bracket at the end of the year which you will have to pay o the IRS. It’s not just 10%.

  • Very Informative and Entertaining. Thank You.

  • I agree. 401K is a scam. I wish I knew back then.

  • Contribute to a roth ira before you contribute to a 401k unless your employer matches contributions.

  • I just got my 60 day notice….so this has become my plan and then I saw your video which helped me reaffirm my plan. I will have $193k of 401 money but with 20% penalties but still enough to buy enough property to replace my income. Wish me luck the adventure starts next month when I officially get my hands on that cash.

  • This is great! I do this myself and my company matches so all the penalties and fees have actually been paid by my company.great strategy!!

  • Wrong… only putting in a small portion in 401K with my company matching that it… free money!!!!

  • Aren’t taxes closer to 40% from a withdrawal?

  • I've worked as a lender and a real estate investor for over 15 years I borrow from my 401 and buy real estate as well stocks will be dropping as we move forward in 2019 so if you borrow now you are selling your funds high and as the cash flow comes in your paying your 401k back thus buying the funds sold back lower as you are now buying funds low once the market improves you can then borrow again when stocks are high and repeat

    good video guys

  • Another great common sense video. Thank you.

  • Cash that shit out and buy some real estate!

  • Not being sarcastic but where do you find a property that you pay $40,000 that generates $700 of monthly income.
    I have two properties. One appraised about $600k and another at about $300k and neither makes me $700 per month. By the time I pay taxes, maintenance, insurance and pay the mortgage I break even. I also have 401K money but as you explain we've been taught to stash it away. On the plus side both my properties are about 3 years from being paid and we live in a little home that is paid off.
    I truly admire people that figure it out and I will continue to research information so thank you.

  • No thanks. I have over $900k in the Roth 401k and $450k in before tax.
    Im debt free and not paycheck to paycheck.
    Also $800k in my Roth IRA and other investments,savings,passive income,etc..
    And no mortgage so my total living expenses is less than $1500/mo. In upper middle class area on a $135k-$160k/yr. income.
    I'm not stupid.

  • That was right on point, very well information.

  • Questions:

    1. Does the withdrawal (not early) amount count as income, thus putting individual in a new tax bracket for that year?

    Example: 2018 12% $35,000, 2019 22% $75,000 ($35,000 inc + withdrawal $40,000)

    2. If you take an early withdrawal (pay 10%) can’t you defer the income tax being taken until you file your return for that year? With deductions your AGI (which includes the amount of the withdrawal) you could minimize the actual income tax you would have paid upfront, correct?
    Also, if you purchased a rental property in that same year couldn’t that further reduce your taxable income?

    3. What if you are risk averse but want to contribute to a 401k for the matching? Over time you won’t earn interest, but will have more money due to employer matching. Could you end up in a high tax bracket, but get more than you contributed due to the employer’s money is paying the tax? Or is the example below too simplified? Also, you may still have deductions, so your
    AGI could make an even bigger difference in the amount of taxes owed.

    Example: Income $100,000 per yr for 20 yrs, 5% contribution, 5% matching, $10,000 per year times 20 yrs = $200,000 in 401k. 25% tax bracket at time of $200,000 withdrawal, $50,000 taxes, $150,000 left.

    Bottom line, is it worth doing both, real estate investing and 401K( or IRA) contributions?
    There’s risks to both. Inflation and lack of control vs control and tenant issues. Which one can you control the risk on most and build the most wealth from over time?

  • This is great advice. Hope to find more videos like this on your channel that gives more tips.

  • How cau you cash out 401k ??

  • Did that 3 years ago best thing I’ve ever done in my life

  • Wait how much do you have going into your 401k that allows you to buy a house a year

  • I had 21000 in my 401K and I took it early I ended up getting a check for 11000 that doesn't seem like 10% to me I think there's more fees then hes telling us

  • WHAT? Why not a self-directed 401K…Entrust or Equity Trust both allow self directed 401k's that allow you to buy real estate. A great way to build your 401k

  • Clayton said "I love ya, I do…SOME of ya"! Funny!

  • Our company has a pension plus a 401K option. Over the last 20 years I have also invested in rental properties and have 10 units. My 401k has grown enough if I cash it out to pay off my units and now produce 100% cash flow. I am only 45 and still have several years of work ahead of me but thinking of withdrawing the 401k and securing the cash flow by paying off the rentals. If I wait and the stock market goes down and I lose the 401k option It will take me about 15 years to pay off the rentals. Do I cut the cord now or hope the economy does well and let the rentals pay off them selves in 15 years and still have 401k?

  • Great info..I was thinking about this..And boy did put in perspective..Thank you

  • Your awesome man!! Who ever gets offended is because they dont invest smart like u

  • Worked at U.S Treasury. Bad reference.

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