Skip to content
×
Try PRO Free Today!
BiggerPockets Pro offers you a comprehensive suite of tools and resources
Market and Deal Finder Tools
Deal Analysis Calculators
Property Management Software
Exclusive discounts to Home Depot, RentRedi, and more
$0
7 days free
$828/yr or $69/mo when billed monthly.
$390/yr or $32.5/mo when billed annually.
7 days free. Cancel anytime.
Already a Pro Member? Sign in here

Join Over 3 Million Real Estate Investors

Create a free BiggerPockets account to comment, participate, and connect with over 3 million real estate investors.
Use your real name
By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.
The community here is like my own little personal real estate army that I can depend upon to help me through ANY problems I come across.
Starting Out
All Forum Categories
Followed Discussions
Followed Categories
Followed People
Followed Locations
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback

Updated over 19 years ago on . Most recent reply

User Stats

7
Posts
0
Votes
N/A N/A
0
Votes |
7
Posts

is this bad idea? negative cashflow with equity loan

N/A N/A
Posted

a newbie here. I'm interested in buying a rental investment property. My brother started his investment 2 years ago and he's doing pretty good. He has recommended to take the equity loan as much as I can from my first house and make smallest possible down payment on the 2nd house. His logic is that if I get comfortable with being a landlord, I will have extra liquid cash in the bank to buy 3rd house for rental. He says if I use up the cash, I will have to take another loan down the road.

So here is the data:
- equity on the 1st house is about 100k
- I'm looking at buying the 2nd house for around 350K
- I have good credit score around 790
- I have saving of $40,000

Based on the calculation, I will break even with my cash flow if I make 25% down payment on the 2nd house. If I do 80/15/5, I will deplete ~ $400 every month, but I'll have over 100k usable cash.

I'm not sure whether to make big down payment to minimize the monthly cash bleeding or keep the cash as much as I can in the bank for 3rd house. Or meet some where in the middle?

I'd appreciate any thoughts/feedback.

Loading replies...