Real estate investor borrowed from 401(k) to buy her first property

After medical school Dr. Jill Green faced about $1 million in student debt and had virtually no assets. "My net worth was negative $1 million," she said. She heard a physician couple, Kenji and Leti Asakura, describe using real estate to create extra income, enrolled in their $2,500 course, and after applying what she learned received a $40,000 tax refund that she used to buy another investment.

The biggest hurdle was the down payment — she and her husband didn’t have $200,000 in savings. They did have 401(k) funds, which she had assumed were off-limits, until she learned she could borrow from the accounts rather than withdraw. "It was essentially taking a loan from yourself, and you're paying the interest back to yourself," she explained.

They borrowed from their 401(k) to purchase a medical office building and used an SBA loan in a low-rate market, locking in about a 4% interest rate. Taking the retirement loan felt risky at first.

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