I have a tale to share with you regarding retirement accounts, and it is not a mustachian one. We were even more extreme when DH FIRE'd in 2011. I've always paid in 401k to match + a little. DH had a loosey-goosey match from his small business employer and is very stock market phobic so his contribution stayed very small. His allocations sucked to boot, and there were lots of losses on his account whereas I use Fidelity and picked pretty solid streams that did well. He decided to bet on himself over stocks and created a business plan to use his meager 401ES (VERY unmustachian) to buy our second rental. Today it is our best income producing property. That property nets about 24% of our total living expenses and the result has been a huge psychological building block toward our final FI plans where I get to quit my gravy train day job. (DH handles the rentals and does all those awesome FI things I get to read about!). We've taken some risks which have worked out good for us. We had some great real estate prices here in PNW that forced our hand to pull the trigger to acquire as many good CF properties as our meager funds could bear. It is apparent now that we might have to look in a different region to make the next purchase as I am not seeing anything that passes any kind of test - not even close to 1%. We secured phenomenal interest rates which allowed more leniency with the various % rules out there at the time of acquisition. So, for us, by the time funds are replenished enough for rental #4 the game will have changed. Indeed after using his retirement to fund rental #2 we were able to dip into some home equity to come up with funds for #3.
So back to our rental purchased with retirement funds. That duplex, at the tale end of the lowest point of the real estate slump for our area, was priced for a quick sale by a 1031 exchange owner. We paid $255k and watched that property shoot up every month since we bought it in April 2013 to the current Zillow price of $391k, simply amazing.
It is possible at this point that it could fund rental #4 depending on how the market looks this summer.
I am absolutely NOT endorsing the methods DH chose to proceed, but if you have conviction to pursue real estate, then be sure to think outside the box when looking at ways to get your feet wet.
One more quick inspirational tale... Across the street from our home is this double lot with a tiny home in the front left corner of it. We've lived here 13 years and that property has been a rental the entire time. About 2 months ago on the back opposite side of that land, on the other lot, construction began. At first I thought it was the county building a large garage because it is a strange tall building with only a few windows upstairs and three big garage bays below, the middle a tall one and short ones on either side. They painted last week and I noticed today it MATCHES the paint of the tiny rented house. I also noticed an old red truck there today with a bowed over old man nosing around the lot. You know what... I bet he bought both lots 30 years ago with every intent on building his "retirement" nest years later, he certainly did not build it to sell because it doesn't even look like a house. It will be interesting to see if he backs in a huge 5th wheel into the middle bay after it gets finished... Hah! Real Estate is a wonderful thing:) He is realizing his dream for sure...
I say make a complete business plan and if the numbers work for you, pursue it!