Using Equity in Primary Residence to Buy Another Rental

[Ryan Dickinson]

Hi Everyone,

I'm relatively new to the REI world. I have one rental property now, and I'm looking to acquire another. I could use some experienced insight on my plan.

I would like to use the equity in my primary residence as a down payment for my next rental property. According to my bank's online valuation, the conservative market value of my primary is $306K. Our loan balance is $166K. Knowing I can borrow up to 80% LTV on the primary, I should have up to approx $79K to work with ($306K * 80% - $166K). I'm leaning toward a HELOC to access that equity.

I have some questions on this process:

1. Are lenders generally OK with the down payment coming from a HELOC?

2.  If not, would a cash-out refi on the primary be viewed any differently?

3.  What would you suggest if these are both terrible options?

Thank you in advance for your help!

Best,

Ryan