$130k Cash what to do?

[Chad Verde]

Hi BP,

I have quite a bit of equity sitting in a rental property I own. Gathering different opinions here. What would YOU personally do with about $130k cash to invest in real estate. Just want to hear everybody's thoughts.

[Jonathan Greene]

I think you need to reposition how you are talking about this equity. You don't have $130,000 in cash. You have $130,000 in equity that you could use as cash, but then it would a second loan on your house. It's not the same thing.

If you have $130,000 in equity, I would not use any more than $65,000 on a new property and $15,000 of that should be held for reserves so you would have $50,000 for downpayment and closing costs really.

Unless your rental property is new construction, you don't want to max out the equity in case of large repairs coming.