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. But today, I want to talk about something different: totally withdrawing from your 401k in order to purchase a rental property.

In this video, you’ll learn about the big problem with 401ks. You’ll also learn how to best weigh your options if you’re thinking about cashing out your retirement account. I’ll share the advice I received from my tax accountant, and discuss the fees associated with withdrawing from your 401k.

This video is for you if you are assessing all your options in order to become a real estate investor. You’ll learn about the differing guidelines for 401k policies, as well as how to change the Wall Street mindset around 401ks.

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

  1. Don Parkes

    Hi Clayton- I have 2 dormant 401Ks that I have yet to rollover to a IRA. Can I roll these into a self directed IRA (without the 10% penalty) and use this to buy rental property?

  2. Biggerstoriessmallerminds

    I really want to thank you for this video! Really needed this boost in confidence.

  3. a64750

    Money buys choice

  4. Cristian Martinez

    Roth IRA…..

  5. Kevin Young

    It gains compounding interest at a higher tax deferred amount and how are you going to be in a higher tax bracket when your retired?

  6. Justin Dong

    Very interest….

  7. CronusAD

    If your company matches any percentage you put in, you already have a 100% gain on each dollar matched, and we havent even accounted compound interests over time.I get the better investment part, but it is also foolish to decline free money. Food for thought.

  8. That's Rich

    "Some of ya…" 😂 401ks are bad, bad, bad. They are not investments, they are savings accounts with unlimited risk and zero control. Never be a passive investor and give up control to any fund manager or financial advisor. Only ever use a 401k in a situation where you have employer contributions or matching, and then only contribute the bare minimum to qualify for the match. Then allocate the contributions to which ever cash equivalent product is offered, instead of a fund that is exposed to market risk. Most 401ks offer something like a money market option. Use that. At the earliest opportunity (like when you're 100% vested), pull that money out, penalty and all and go find a real investment that you can control your ROI and risk in. I never recommend for people to use tax sheltered vehicles when it comes to investing. That is a straight up scam. Avoid IRAs, Roths. Educate yourself, create a cashflowing portfolio of investments which offer tax advantages but without tax deferral. The only tax deferral product anyone should be using is a 1031 when appropriate.

  9. JAI HD

    Fox news!!!

  10. Artruro Ruiz

    I pay off my house I have around 250 if I sell it i will like to buy something that makes me some money what would you suggest

  11. Michael rodriguez

    Everyone told me I was crazy when I told them I didn't plan on retiring I didn't even touch the 401k I just bought rental properties.. my thinking was it's a great way to stay busy and the rich usually have stuff going on like warren buffet so if I wanna be like them I have to do what they do which is invest

  12. Manuel Gonzalez

    Clayton, if a full 401k withdrawal is taken due to a change of employers I can expect about roughly 45% tax rate (includes 10% penalty). Say along with ROI at 12% or higher on investments to justify 10% penalty, can I offset some of the tax expense I will owe by writing off investment expenses such as (rehab, insurance, depreciation, etc) to keep more of my 401k money?

  13. Armando Gonzalez

    Where can I buy properties for 70k and rented out for $700
    Thank you

  14. Terry Heaton

    to pay off second home.

  15. Terry Heaton

    I bought two single family homes through my IRA in Denver in 2013 and 2014 without withdrawal penalty. The money has to be managed through an IRA company that works with non-cash assets. You have to put 35% down for the loan. The bank has to be willing to do a non-recourse loan.
    Because of what I bought it for and rents have gone up I paid off the first house earlier this year and I am using rents from both houses

  16. George Garner

    I don't trust anyone I'm glad to get a 2.3% return lol

  17. hihaters2004

    Fuck the 401k it's a scam

  18. Hocine Bekkair

    +Morris invest Can I withdraw from my 401k when I just started my job and my 401k amount is small or do I wait for my 401k to build up to a good amount to withdraw thank you

  19. Perlyn Bartulaba

    im happy to hear that taking money out of my 401k for my first home is not a bad idea! thanks for sharing what you know!

  20. D LG

    Only if you're a complete idiot.