Use home equity or use bank loan to purchase single family house?

[Chris Schorre]

Hi everyone, total newbie here...my first post. I am looking to purchase a single family home in Austin Texas for about $500K and then rent our existing home (also in Austin) - which we can net cash flow about $1,000/month. We have about $900K in equity on our current home and roughly $150K in liquid cash. So, my question is what financing option should we explore to buy the second $500k home? Bank financing with 20% down? Or home equity loan on primary home? We both have excellent credit of 810+.  After we buy the $500k home (which will become our primary residence), we do plan to buy more rental properties in Austin. Appreciate the advice. 

[Joe Scaparra]

@Chris Schorre , I'm curious why you seem happy with a 1.3% return on your 900k equity on a house you want to rent out.  Netting 1k a month or 12k a year on an asset that you have 900k in equity equates to 1.3% per year return.  Especially when you state you want to further invest in more rental properties.  

One of the easiest mistakes newbie investors do is rent out a home they were living in as it just might be convenient to do so but maybe not be the best solution to what they are trying to achieve.  I'm not saying you are a newbie at investing as I really don't know.  It does sound like you are very responsible as indicated by your credit score and the assets you have acquired.  So really your investment direction leaves me more curious than anything.  Even though I'm 64 I'm always open to learning more. Enlighten me.