primary residence equity

[Kurt F.]

I'm fairly new to investing. Currently own a primary residence and one relatively cheap duplex -- of which one side is rented and covers the mortgage, taxes and insurance...I am finishing the other side to get it rented out and some cash flowing. I owe about 50K on the duplex, and when finished it will probably be worth 110K.

I need your thoughts on this: have any of you used equity in your primary residence to purchase investment property? My home is paid off completely. I am typically quite conservative with money, so the idea has not my favorite. That said, how smart am I handling this? Would I actually be smarter to use that equity (if it's even reasonably accessible with the refi expenses, etc.) or should I stay safe with a paid off house and get the money through other means?

Really would appreciate your thoughts on my situation...thanks.

[Jon Klaus]

You could get a mortgage of 3.5% on your primary residence. Can you do better than that if you invested the loan proceeds? Yes? How sure are you? What kind of return could you get? Sounds like your duplex will do far better than 3.5%.

I am 90% confident that I cadover a10% return in this environment
I'm 70% sure I can get 15-20%
I'm 99% sure I can beat 3.5%

I beleive I should be rolling home equity into the extraordinary returns (more deals) today's market is allowing.

Caveat: judiciously with appropriate cash cushion.