They based their loan on ALL of the properties, if you reduce their collateral value, you worsen the position that they did the underwriting on.

Add to that the fact that private financing typically involves way less bureaucracy, with reduced paperwork and fewer hoops to jump through.

Using a 401(k) loan reduces your emergency liquidity, which could make the investment riskier if unexpected costs arise.

It can eat into your cash flow, but if you're earning high income from your W-2 job (I assume you are if you're buying in all cash), it makes more sense to use your time making more income versus managing maintenance requests as you scale. 

If you are not cash flowing and have a high earning job you don't need to deal with 3 or 4 rentals. 

Implementing water-saving initiatives is a smart way to reduce utility costs.

Question that the “believers” don’t ask is “how much could I earn on the extra money I’m spending to pay down the loan faster?  

This fosters a top-down management approach that ensures accountability and efficiency throughout the property.As I've earned from my own experiences, the difference between a good operator and a poor one lies in effective asset management.

But it seems to my simple way of thinking isn't that *also* going to reduce your monthly benefits to a large percent?

Thing is, you need to understand it's going to a difficult way to earn a living.