401K and Cash-Flow Confusion

[David Hicks]

Hello, I am dealing with what looks like a great deal and here are the particulars:

• Duplex converted from SF Bungalo
• $170k for property in $180k-200k neighbohood
• Downpayment from 401k - average return is 6% normally, but this loan makes me pay 5% back to myself.  
• PITI = ~$1100
• Rental Potential = Low-End $1600/month or High-End $2000/month.  Could go higher, but these are more realistic numbers for the area
• Looking to get electric & gas lines split to add additional meters and sub-meter water - to pass all utilities on to tenants
• Monthly NOI (before utilities are figured out) $500-800
• Monthly 401k Payment = $840 for 60 months

So, I realize that the utilities could kill this deal and I am having those vetted during the 7-10 inspection period.  I am willing to make a small investment upfront ($1k-$3k) in order to know that my utilities are taken care of by the tenants going forward forever.  

My question, not to keep drawing it out - is it a good idea to use "no money down" in the form of a 401k and then to have a monthly payment of $40-$340 per month in order to save having to put $40k in capital down at one-time?  I know the idea is to make money off the investment, but technically, I am not actually putting any money down and the investment will also be helping me pay back my 401k.

I am also aware that I will have an opportunity to refi down the road and pull cash out, as this market is not slowing down in the rental area, anytime soon.

Thanks in advance for your honesty!