I recommend to my clients a personal guaranty if it is an entity-borrower or business purpose affidavit if a human-borrower.

Cash flow is around $500 a month.I could also borrow all of it out of my 401k.  

One of the overwhelming things that keeps people from taking action and investing in real estate, is not knowing what their options are, what their borrowing power and options are, what their financial costs and requirements will be to buy, and then to make payments, what their return for that investment will be (income, appreciation, liquidity).

Without the title in hand you wouldn't even really know if the "owner" truly even owned the car or not. he could've borrowed it from a freind or let someone park it there years ago for all you know.

Hey @Haley Edwards You are likley best to refinance (borrow from) your newly aquired rental property than borrow against a 401K.

Also for those who are taking a loan on their 401k, do they need to sell their equities equal to the amount they are borrowing, or are you borrowing against your 401k?

Or you could borrow against your 401K. 

If this is the case, the lender will take a hard look at you as the borrower personally, but many will also include rental income from the property in their underwriting. 

The reason being is credit is a good predictor whether or not a borrower will pay on the note. 

Therefore you are borrowing at a higher rate to pay down a low rate loan.How much value add are you doing?