Did you know that most 401k plans allow you to take out a loan? This provides you a large chunk of money with which you can purchase an investment.
Most 401k plans allow this, under certain terms. Typically, there is a maximum amount that can be withdrawn, and the loan must be paid back within one to two years.
Many people are afraid of this idea. We’ve all heard it before; society tells us that we should not, under any circumstances, touch our 401ks.
The truth is, there is little risk in borrowing from your 401k, and it can be a resourceful way to purchase real estate investment properties. By doing so, you’re taking that money and turning it into a performing asset.
The repayment is automatically deducted from each paycheck. Not only are you borrowing from yourself, you’re also paying interest on the loan back to yourself. It only makes your retirement account larger in the end!
Borrowing from your 401k is a surprisingly simple process. It only takes a few clicks, and you can have part of your balance transferred to your bank account within a couple weeks.
Although many investors warn that you shouldn’t mess with your 401k, it’s how we’ve built our real estate investing business. It’s worked for us, and it could be the right decision for you too.
Hear my experience utilizing this strategy on the Investing in Real Estate Podcast!