Are my fears rational?

[Michael Phillips]

I’m trying to make a decision on how to get started in buying the first investment deal. I have a $130k paid in full personal home and I’m nervous about putting my home at risk by leveraging it if I have a deal go wrong. Are my fears rational? Would it be better to save a down payment and leave my home out of all my future deals?

[David Pere]

@Michael there is risk in any investment strategy. If you save up $60k and lose it all you lost $60k...if you take out a $60k HELOC loan, and lose it all you lost $60k. The benefit with the HELOC is you can reuse it, and only pay interest on the money you utilize. Yes, there is a little risk but not a ton. Especially if you run a strict analysis, having a HELOC set up costs you virtually nothing (after fees for setting it up) and will allow you to have funds available immediately when you find a good deal. I think this is more beneficial because saving a large chunk of change for a down payment takes time, and time is a great ally in the investing realm!