Question on using equity in primary residence to invest

[Mary E Zimmer]

Hi!  I'm new to real estate investing, and was going to use a cash-out refinance of my primary residence to fund a rental property purchase.  However, doing this would mean that the rental property purchase would have no mortgage, and thus would be a bigger target for lawsuits.  Yet, I have heard one shouldn't just sit on the equity in one's primary residence and should use it instead.  I of course intend to get great insurance on the rental property, but even this might not be enough to protect from lawsuits.  I would really appreciate hearing other people's thoughts on this.  

[David M.]

@Mary E Zimmer

You probably need to shop around.  You don't need a mortgage broker to find you a residential lender that will consider your expected rent schedule when qualifying you for a loan.  if you message me I can refer to you mine.

Many investors, on BP and probably elsewhere, hold rental properties in their name in various levels of leverage.  Just keep the property in good repair, get the homeowners/landlord insurance, and get an umbrella policy (which really is pretty cheap for what it offers) and you should be fine.

Whether you use the equity in your home is up to you.  Opinions are a dime a dozen.  It depends on your investment strategy and goals as well as your tolerance level.  There is nothing wrong with own a your home free and clear.  At the end of the day, at least you know you will have a roof over your head.  Sure, you could mobilize the equity in your home and try to make it perform for you.  But, for example if retirement is near for you, I wouldn't want to --- just my personal strategy...

Good luck.