Question about leverage

[Ajay G.]

Hi BP community,

I'm a brand new investor in the process of completing my first purchase of a single family rental. I am leveraging a HELOC on my primary home to fund the 25% down payment for the investment property. Planning to get a low/no cost mortgage to close and then refi later to get some money out. My question is, how do I go about buying my 2nd/ 3rd properties and so on. Here are some details that might help with your answer:

Primary Home equity ~$2M (not including the HELOC)

HELOC $500k with 15 yr draw & 15 yr repay

Rental investment property ~$550k

Cash Flow ~ $50-$100/mth

I do realize that I will end up paying interest on the HELOC that I draw from for the down payment, which will be larger than the cash flow from the investment property.

Again, appreciate any help you can provide in helping me understand how i go about leveraging assets to buy my 2nd and 3rd properties and so on. 

[Sherief Elbassuoni]

@Ajay G., you do not need to put 25% unless you are buying small multi-family. Single-family homes are just 15% down. You do not also need to use all the $500K HELOC. All you need is a fraction of that to cover the downpayment and closing costs