Advice on Turnkey investing

[Eric Crosby]

Hello all, I'm looking for some advice on Turnkey investing for a rental property. I was thinking about taking a HELOC on my primary residence to find the investment. Currently we have about $250k in equity. I was looking at properties in the mid-west around 100k. I do not have much saved in my savings account, about 4k. Most of my savings is tied to my 401k. Approximately 200k. My wife and I currently make about 175k/ year before taxes and other deductions. Would taking out 100k to buy a property and own it outright be a good strategy if we could be cash flow positive from the get go? I typically don't like to add additional debt tied to our primary residence.

[Todd Crippen]

@Eric Crosby this can be a great strategy, but it can be case by case depending on your interest rate and debt structure. I know you mentioned not wanting to tie additional debt to your primary residence, but if your equity is that high and you're purchasing a property below the amount of equity, a creative strategy could be:

1. Because the interest rates are so low, only taking out 25k for a 20% down payment on a property around the 100k mark to get an idea of what the process is like,

2. after vetting a quality company, buying one outright and calling it good, or

3. buying one outright, and another one leveraged, with total debt under your equity amount, to diversity your doors/addresses. You can also take a portion of your higher cash flow from the one paid off to pay additional principal to boost your cash flow on the other as well (I don't have any experience with this but I have heard of people doing it).

It all depends on how complex you are wanting it to be and what your risk tolerance profile looks like.