How much down?

[Randall Williams]

Hi gang, would appreciate your thoughts on this one. 

I'm buying a second duplex, using financing from my first duplex. I bought the first 6 months ago at $82K, the bank values it at $140K. ($90K is likely resale value.)

Second duplex is selling for $80, needs $10K worth of work. I'm considering taking $90K against my first property at 5% to buy this one outright plus reno costs, and keep my (currently +6.5%) liquid investments liquid. (Likely resale value on this second duplex is $110)

Downside: more financing = more exposure to risk (the loan is 20 yr, first 5 years fixed, then floating.) downside is less cash flow because more goes to debt service. Upside: I keep the liquid for other things if needed, including paying the loan off if the interest rate suddenly goes ballistic in 5 years.

OR: should I drop $30K into the house, and finance $60? It makes a smaller monthly note, but ties up more capital. Better to keep the liquid capital accessible, right?

Any ideas on that would be mucho appreciated, thanks!

R