As a disclosure, I am neither a financial advisor nor a CPA.I am just obsessed with the notion of financial freedom and love exploring ways to expedite the journey. There are other things to consider including in your reserves, as well as other creative ways you can reap the high returns of real estate, tax-deferred. In order to qualify for any conventional-type loan that is sold to Fannie or Freddie, you need to have a certain amount of months of reserves (or liquidity).
The thought the young folks have is that if you are in your 20s and in pursuit of financial freedom, it is likely you will be financially free well before you hit the age of 60.
Therefore, the amount in your 401k will not matter.
Depending on the balance of your 401k, this will free up to $50,000 for you, which will be more than enough to get started on a house hack.
This PARTNERSHIP AGREEMENT is made on ____________, 20__ between __________________________________________ and __________________________________________. The principal office of the business shall be in _______________________. Upon the demand of either partner, the capital accounts of the partners shall be maintained at all times in the proportions in which the partners share in the profits and losses of the partnership. A separate income account shall be maintained for each partner. The partners shall have equal rights in the management of the partnership business, and each partner shall devote his entire time to the conduct of the business. All funds of the partnership shall be deposited in its name in such checking account or accounts as shall be designated by the partners. The partnership books shall be maintained at the principal office of the partnership, and each partner shall at all times have access thereto. The partnership name shall be sold with the other assets of the business. Upon the death of either partner, the surviving partner shall have the right either to purchase the interest of the decedent in the partnership or to terminate and liquidate the partnership business.
Most financial advisors and older folks will tell you that it’s better to contribute to your 401k and let it grow tax-deferred.
Meanwhile, the younger folks in pursuit of early financial freedom are skeptical of this advice—and rightfully so.
The one limiting factor is that you cannot get a conventional recourse loan with your 401k.
That means that the low-down payment, owner-occupied loans are not available. You can give yourself a loan from your 401k for the lesser of ,000 or 50% of your 401k’s balance.
If your goals are to accumulate maximum net worth, then the self-directed account makes the most sense.