Buying a second investment property when I don’t have access to equity from 1st

[Cristopher Hanks]

Greetings,

I currently own one single family home. I have a lot of natural equity built up and I currently have tenants occupying it on a -2 month lease. I am currently living in a separate property I don’t own, just renting as a tenant myself.

I have been reading a lot about using equity to purchase a second investment property in the form of a HELOC or Cash out refinance. However, most banks will not offer those on investment properties because I'm not living in it full time. And those that do don't recommend it because rates are so much higher going that route.

What is the best way to secure a second property in my current situation? Do I just need to save up 20% for a down payment? Or is there another smart/not extremely risky way I can accomplish this. So far no one I’ve talked to has been able to help. 

Thanks!

[Nathan Gesner]

Quote from @Cristopher Hanks:

Do I just need to save up 20% for a down payment? 

That's the best option that nobody likes to talk about. Throughout history people have worked hard, saved money, and invested. Today, everyone wants a shortcut.

Dave Ramsey took a shortcut in the 80's. He was a multi-millionaire in his early 20s doing what the majority of "gurus" online are encouraging folks to do today. The market shifted, he was caught over-leveraged, and he lost everything. I would argue he's smarter than the average bear about investing and he warns against this all the time.

You could borrow from your equity. You could borrow from Aunt Irene that's lived frugally and saved up $60,000 over the last 50 years while sacrificing comfort to better care for others. You could partner with some stranger on the internet. All of these are touted as "free money" but nothing is free and they all come with risks.

I personally like the model where you work hard, save up, invest wisely, and wait. When all the TikTokers and YouTube gurus go bankrupt, you'll  feel pretty smart and you'll probably have some money in your pocket to pick up properties on the cheap from all those that were over-leveraged and failed.