Financing the down payment for our first rental property

[Evan Scott]

Hi! My name is Evan Scott and my wife is Kathryn Scott.  We are a couple in our mid 30s and have two kids, a 8yr old son and a 6yr old daughter.  We both work full times jobs on a 9/80 schedule with every other Friday off.  We live in Ventura County, California.  Our goal is to leave behind multiple rental properties to our children and perhaps gain some financial independence along the way. We currently own 1 home and it is our primary residence.  We purchased this home 3 years ago for 780k with 180k down, we recently refinance for a lower interest rate (did not pull out any cash) and it appraised at 970k, which is what houses in our neighborhood are currently selling for.  We want to purchase our first rental property but the typical single family home in this area is about 650k, so down payments are massive. We are not sure how to generate a down payment for our first deal.  I also have about 375k in my 401k but we are not sure if borrowing from that is the best option.  We are grateful for any advice or wisdom that this community may have to offer.  Thank You!