I would try to get the asking price lowered or walk away.

It's new price is even lower @$335,000 as of 1/17 according to Zillow and Realtor.

The options are either pay more for lower returns or go out and find the deals on your own.

Usually properties that bring in a lower rent also have less overhead when it comes to upkeep i.e. no HOA's, the property is smaller in general so repair costs are less, and so on. you really need to look at the overall investment and factor everything in because in my opinion rental price is just one aspect.

If you purchase the property at the right price it should lower your DTI.

@John McAuleyThe following links cover the prohibited transaction rules.https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-prohibited-transactionshttps://www.irs.gov/retirement-plans/retirement-plan-investments-faqs

Keep in mind that any existing assets you own could not be sold to the 401k because of the prohibited transaction rules.

The appraisal my be lower but it will be better than paying all cash if you dont have cash.  

Properties are generally much cheaper relative to the rent they pull in, than in NY.3) Lower fixed costs - lower real estate taxes for starters relative to your rent roll, etc.4) Lower variable costs - labor is A LOT cheaper here.  5) Less stringent code enforcement.6) Less maintenance - milder weather, and younger average age of homes make for less maintenance.   7) Diversification - low entry price to buy property allows and investor to manage risk by buying properties in different neighborhoods instead of putting more eggs in one basket.In additional to the benefits I listed above the city is growing so fast that homes rent very quickly, often times before the sale of the home.  

That was a major choice for me looking into the Saratoga county as the taxes can be lower.