Advice requested on how best to fund next purchase

[Samir S.]

I need a little help thinking through a financing question.  I have one primary residence (5 years) and one rental property (2 years) in CA and I want to move into a new primary residence while renting out my current primary residence.  My rental has gained about $80K in equity in the two years I've owned it.  With no vacancy or maintenance, I cash flow a little over $200/month.  To help fund my next purchase, I was thinking of doing a cash-out refinance for around $40K on my rental and combining it with my savings, giving me nearly $100K to put down on a primary home.  However, that would drop my "no vacancy or maintenance" cash flow to just about $0.  I also have the option of taking a $50K loan from my 401K.  Which route would you choose?  Is there another option I am not thinking of?  Your advice is greatly appreciated!