I have approx. 80K in 401 at this time would it be wise to cash out and buy investment prop.? I feel that investment prop. For the long term is a better option (10-15yrs). I know that I would take a hit for pulling out or is there a way that I could do it??

Not a good idea. First, taking money out of your 401(k) would require that you pay both income tax (state and federal) and a 10% early withdrawal penalty. Depending on your tax bracket, you may end up with only 50% - 60% of your investment. Second, your 401(k) has the advantage of tax-deferred growth. Finally, investing in real estate does not have the advantage of diversification - if you invest in 1 property you are taking on a huge amount of risk. Better to take advantage of the diversification you can get through your 401(k) by investing in a broad basket of domestic and international stocks and bonds. If you want to invest in real estate, you should first build up a separate savings pool of money - while still maintaining and adding to your existing 401(k).

While I totally agree with ebaines, there is one way you MIGHT be able to do this. See if your company will offer either a self-directed investment vehicle or a property based fund.

I agree with EBaines in so far as you should not cash out your 401k. The penalties are simply too high. In addition, the stock market is on sale right now, so you could very well be selling at the bottom of the market.

If you really have your heart set on buying investment real estate -- and you have a lot of financial discipline -- you could limit your 401k contributions to whatever your employer matches and then put the rest in a money market with the idea of saving up for a rental property. This would keep you from paying the penalties associated with cashing out your 401k, while accelerating your savings toward owning rental real estate.

While I think real estate and stocks are equally good long term investments. Adding real estate to your portfolio would provide meaningful diversification. Some there are some benefits there. If you get into real estate, my advice would be to pay cash. I have seen a lot of people get themselves into trouble borrowing money for rental properties. Renting property is considerably less profitable -- and more capital intensive -- than most people think.

Good luck to you.