Any financial gurus? (Doubt it if you have an 80's buick lol)

[deezdad]

Left a job I was at for nearly 30 years recently, havn't moved my 401k yet so as it stands I COULD take any amount from it.. being several years away from 59 1/2 I'd be subject to taxes and penalty. A condo recently came up in a desirable area in massachusetts that I was thinking of buying as an investment property, essentially cash flow neutral( mortgage, tax, insurance, maintenance) till it hopefully appreciates in value and my tenants pay the mortgage down.. question is, would it be worth it to use $90k of 401k money for a down payment?

 

[LANDAU LIMITED]

Left a job I was at for nearly 30 years recently, havn't moved my 401k yet so as it stands I COULD take any amount from it.. being several years away from 59 1/2 I'd be subject to taxes and penalty. A condo recently came up in a desirable area in massachusetts that I was thinking of buying as an investment property, essentially cash flow neutral( mortgage, tax, insurance, maintenance) till it hopefully appreciates in value and my tenants pay the mortgage down.. question is, would it be worth it to use $90k of 401k money for a down payment?

Far from a financial guru but wouldn't it be more cost effective using equity out of your current property?

 

[deezdad]

That's interesting, I don't know. One draw back I can think of is I'd be cash flow negative having to make the home equity loan payments.

 

[Turbo6inKY]

Left a job I was at for nearly 30 years recently, havn't moved my 401k yet so as it stands I COULD take any amount from it.. being several years away from 59 1/2 I'd be subject to taxes and penalty. A condo recently came up in a desirable area in massachusetts that I was thinking of buying as an investment property, essentially cash flow neutral( mortgage, tax, insurance, maintenance) till it hopefully appreciates in value and my tenants pay the mortgage down.. question is, would it be worth it to use $90k of 401k money for a down payment?

Not a financial guru, because a thing like that doesn't exist. They're all snake oil salesmen.

But I do know the law regarding 401ks, and you don't have to take my word for it because two minutes with google answers your question.

You don't have to move it. You are vested in it after 30 years. You are entitled to leave it there. Unless...

Fees. Now that you don't work there, the account fees your employer was paying to maintain the account start to come out of your balance. That could be almost nothing, or a whole lot, depending on the plan. Figure it out. If it's a lot, roll it into an IRA somewhere that doesn't charge fees.

You say you can withdraw any amount... if you roll it into an IRA. If you keep it then you pay income tax and penalties. Since you're still working, that income tax is going to be at 37%, the top marginal rate.

So, extracting 90K to buy that property would be extremely stupid. You'll be paying income tax plus 10% early withdrawal on it right away. So that $90K condo really is going to cost you ~$133K. Do the math.

And then Murphy will visit and that tenant will turn into a deadbeat and you're going to be stuck with an empty $90K condo you paid $133K for.

 

[LANDAU LIMITED]

That's interesting, I don't know. One draw back I can think of is I'd be cash flow negative having to make the home equity loan payments.

You incorporate that into the rent along with extra for a maintenance account. That's where the risk comes in. You need to keep it rented and have tenants who won't destroy the place. The best renters I've heard of was 2 gay guys. Even with a pet they left the place in better condition than when they moved in. They were there for 6 years.

 

[deezdad]

Good points turbo6 gotta keep ot real that's why I posted here.. housing around here is effing nuts that's why I'm interested..

 

[deezdad]

You incorporate that into the rent along with extra for a maintenance account. That's where the risk comes in. You need to keep it rented and have tenants who won't destroy the place. The best renters I've heard of was 2 gay guys. Even with a pet they left the place in better condition than when they moved in. They were there for 6 years.

Lol spot on from what I've heard too haha.. I'm Like most of u I'm sure.. dgaf what ppl do in there bedroom

 

[Chuck Leeper]

And then Murphy will visit and that tenant will turn into a deadbeat and you're going to be stuck with an empty $90K condo you paid $133K for.

Add to that, it's in a liberal shithole of a state.

 

[deezdad]

Yes & I was trying to cash in on its wretched disfigurement but I woke to an alert that suckers under contract.. maybe I'll go build a Rollercoaster instead..

 

[TexasT]

My grandfather told me they are called brokers because they are broker than you. His advice was told to do the research and due diligence and make the call. Buy and put the money into what you know and understand.

That said, if you don't know that market and rental real estate you might be getting in over your head. This late in life trying to learn a new trick could be costly. But nothing ventured, nothing gained could be your new mantra.

I think real estate even as it is coming down recently is still way over priced/valued but that isn't to say you couldn't make money. The d's(death, debt and divorce) are starting to get our market moving as I'm starting to see yard signs again. From the podcasts and what I've read Florida is shaking loose too. Time will tell but traffic in our area has been on the upswing which is a good sign to me.

As my dad tells me, "you pays your money, and you takes your chances."

 

[Nigel]

You should look into the plan to make sure, but if you leave your current job or are let go you can draw from that employers 401k penalty free if you over 55. You still owe the normal taxes. It only applies to the your current employers 401k, not money from a previous plan. 59 1/2 is still the number for that money.

 

[Pronto]

My boss bought 4 multi family rental properties. They needed tons of work and even doing as much as possible himself and his brother couldn't get enough of the units rentable. Went into bankruptcy get rid of 2 worst. Even with just 2 he couldn't wait for them to appreciate enough to brake even. In the meantime, he ignored his money making business and we lost many accounts from him always being late with getting work done. Unless you have very good connections with reliable people in the trades, it's difficult to bring wrecks back to rentable.

 

[jlat]

Left a job I was at for nearly 30 years recently, havn't moved my 401k yet so as it stands I COULD take any amount from it.. being several years away from 59 1/2 I'd be subject to taxes and penalty. A condo recently came up in a desirable area in massachusetts that I was thinking of buying as an investment property, essentially cash flow neutral( mortgage, tax, insurance, maintenance) till it hopefully appreciates in value and my tenants pay the mortgage down.. question is, would it be worth it to use $90k of 401k money for a down payment?

just curious, where in Mass. that would B?
IBBY

 

[T- Type Tim]

Not a financial guru, because a thing like that doesn't exist. They're all snake oil salesmen.

But I do know the law regarding 401ks, and you don't have to take my word for it because two minutes with google answers your question.

You don't have to move it. You are vested in it after 30 years. You are entitled to leave it there. Unless...

Fees. Now that you don't work there, the account fees your employer was paying to maintain the account start to come out of your balance. That could be almost nothing, or a whole lot, depending on the plan. Figure it out. If it's a lot, roll it into an IRA somewhere that doesn't charge fees.

You say you can withdraw any amount... if you roll it into an IRA. If you keep it then you pay income tax and penalties. Since you're still working, that income tax is going to be at 37%, the top marginal rate.

So, extracting 90K to buy that property would be extremely stupid. You'll be paying income tax plus 10% early withdrawal on it right away. So that $90K condo really is going to cost you ~$133K. Do the math.

And then Murphy will visit and that tenant will turn into a deadbeat and you're going to be stuck with an empty $90K condo you paid $133K for.

Very good info above.....

I got into a roll over IRA to pay my house off the first week in January......took the 10% hit and of course the amount was added to my taxable income.

I did plan this out to payoff the mortgage very early in the year to withhold more in taxes for the remainder of 2025. Nice not having a mortgage payment, but when we did the tax calculation for 2025.......i will need to pay around 15K ( which i am withholding). It sounds bad, however, the interest for the remainder of the mortgage was right around 30k.....taxes or interest......pick yer poison.

 

[Turbo6inKY]

Very good info above.....

I got into a roll over IRA to pay my house off the first week in January......took the 10% hit and of course the amount was added to my taxable income.

I did plan this out to payoff the mortgage very early in the year to withhold more in taxes for the remainder of 2025. Nice not having a mortgage payment, but when we did the tax calculation for 2025.......i will need to pay around 15K ( which i am withholding). It sounds bad, however, the interest for the remainder of the mortgage was right around 30k.....taxes or interest......pick yer poison.

It's all about knowing the numbers, doing the math, and the the correct path becomes obvious.