Generating Down Payment Capital

[Andrew Bertram]

I am a relatively green investor.  I have 1 investment property w/ approximately 40K in equity.  I also have a little more than 60K equity in my home.  My wife and I are currently trying to save as much money as possible on multiple fronts.  We are trying to build a comfortable nest egg, in case something were to happen to one of us preventing us from working for 6 months or so.  We are trying to save up extra savings so that when she gets pregnant, we can afford the time she will have to miss from work (neither of us get paid time off from our jobs).  Finally, we are trying to build up the capital for a down payment on a new investment property.  I may be entirely wrong with my thoughts here, but I feel like I read/heard on the podcast/something that there is a way to use the equity in your rentals to generate this capital.  The way this works in my brain (admittedly not the best source of information) is that I would (for example: my rental property) refinance it for the full value of the home (new 30 year mortgage on the value of the home 165K vs the amount owed approx. 125K).  This plan would assume that the new mortgage payment still allowed for cash flow on the property based on the tenants' rent payment.  In doing so, I would get the extra 40 K in cash which I could use on the down payment for the next property and then repeat.

If this is a nonsense approach, please let me know.  I am fully prepared for that possibility.  Alternatively, I am looking for advice on any and all ways to generate the capital needed to keep investing and to increase the frequency with which I am able to acquire new properties.  I am trying to avoid using investors (at least until I am more confident in my ability to find deals).  For my first few places I'd like to be able to do them on my own while I am still able to get multiple mortgages under my own name.

I have many other questions regarding my future plans if anyone would be available to message me and help me out a bit. These include, but are not limited to, "the benefits of forming an LLC or trust," "how much (%) do I need to put down on properties in which I will not be living," "factoring in the income tax I will pay on the profit of the rental into my cash flow projections," "how to find/utilize a local wholesaler effectively," "are their any local lenders who require lower down payment percentages on investment properties."

I live in Maryland, in the Baltimore area.  Specifically, I am interested in doing much of my investing in Harford County.  But I am more than willing to expand that region if it is to my benefit.

Thanks in advance to any and all who are willing to share their knowledge to help my wife and I grow our business,

Andrew Bertram