Cash down or use line of credit for first rental

[Tyler Wright]

Helllo everyone, I am new to REI and taking the time now to learn as much as I can. I am looking to buy and hold on a single family property in the Richmond, Va area. I currently own my own house and was wondering if I should save up some extra cash to invest in a new property or should I use a line of credit to put down on a new house. I currently have enough cash to be able to put down 25% on a small home. Just asking around to see if I should save more and just use the line of credit or to keep the equity I already have. Any advice would be much appreciated! Thanks

[Nathan Gesner]

Quote from @Tyler Wright:

Helllo everyone, I am new to REI and taking the time now to learn as much as I can. I am looking to buy and hold on a single family property in the Richmond, Va area. I currently own my own house and was wondering if I should save up some extra cash to invest in a new property or should I use a line of credit to put down on a new house. I currently have enough cash to be able to put down 25% on a small home. Just asking around to see if I should save more and just use the line of credit or to keep the equity I already have. Any advice would be much appreciated! Thanks

A line of credit is another form of borrowing, which means you would borrow money in order to borrow money. That's over-leveraging and not advised. I have a big line of credit and I only touch it if I need a big chunk of money fast and if I have a concrete plan to pay it off quickly (6 - 12 months).

I recommend you use the cash.