Max a 401k or save for Real Estate?


#21

A live-in would be great due to the cheaper financing. That’s one area I have looked at more closely than others. Comfortable with both a live-in duplex situation or a single family that is bought and improved over a year or two before rented out. Just gotta find the right one.


#22

including RE as a way to diversify retirement/reach FI is definitely a primary objective. I just have to remind myself of that. It’s just much easier to see your 401(k) account increase in value with each paycheck than it is to see your bank account drop significantly when purchasing a home! :slight_smile:

Thanks for the recommendation.


#23

Saving for retirement is great at any age. But I can say from experience that when you are looking to retire early, that 59 1/2 seems pretty far away. We’re 2 1/2 years away from my husband leaving the workforce for good and it’s a little stressful to see that most of our net worth is in IRAs that we can’t touch (without penalty) for years.

It’s really putting the pressure on us to make sure that we have enough in cash and taxable accounts to leave the IRAs (roll-over 401(k)s) alone.

I’d also say start slow with rentals. We were landlords once and it’s not for everybody. There are some great financial rewards, but sometimes tenants are a hassle!


#24

It leaves the account, but you pay it back with interest to yourself, so that helps a little.


#25

If you need to build up cash to buy real estate, you may want to look into taking a partner or finding deals for other investors. I started out with the latter and went from there. Though, you’ll need to set aside time to learn the market, network and find deals. Regarding the 401(k), definitely keep contributing. A small adjustment may help regarding the amount. Though, the experience you get from being around others who are doing what you want to do in real estate is priceless. You may want to check out your local real estate investment club and start networking during your off time. Good luck!


#26

I’d definitely stay away from the 401k loan. If you leave your employer you have to pay it back in a set time. Under 2018 tax law you have until October of the next year.

You’d essentially lock your career choices with one employer until you get it paid off in the best case scenario. In the worst they’d lay you off and you’d still have to pay early.


#27

Contribute to 401k. Also save money in non-tax deferred accounts.

I maxed out 401k for years, but then when I wanted to buy a house, I was short of cash for down payment because it was mostly in 401k and IRAs. Eventually bought the house. But it taught me cash is always needed.

PS, Do NOT borrow from 401k. You are shooting yourself in the foot if you do.