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Updated almost 10 years ago on . Most recent reply

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8
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1
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Steven Lacy
  • Santa Rosa, CA
1
Votes |
8
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Using a line of credit, Good or Bad....

Steven Lacy
  • Santa Rosa, CA
Posted

I have a line of credit and would like to know if it is smart to use this line of credit for a down payment on my first investment property?

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1,870
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Aaron Montague
  • Rental Property Investor
  • Brookline, MA
777
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1,870
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Aaron Montague
  • Rental Property Investor
  • Brookline, MA
Replied

@Steven Lacy

Always do the math!!

If the property you are looking at is going to pay you $210/month and 17% Cash on Cash, AWESOME!!

... unless you have to spend the first 10 years paying $230/month against the line of credit you used to make the down payment.

Where the money comes from is not important.  The rate and the term are the big deal.

If the numbers still work while you pay down the line of credit, yes, it is a good idea.  If those extra payments are going to move the numbers below your minimum investment criteria, then no, it is a poor way of funding a down payment.

  • Aaron Montague
  • Loading replies...