Mortgage is paid off, should I refinance house to buy investment?

[Zariyan S.]

Hello,

My current house market value is ~$350,000 and paid off. My wife and I are interested in buying an investment property to rent. However, we don't have a sizable downpayment at the moment.

Would it be worth refinancing our current house to buy an investment property ~$180,000 and renting that out? Or should we save until we have 20%?

Not sure of the best way to approach this.

Regards,

Zariyan

[Ashish Acharya]

@Zariyan S. , 

1) You should apply for HELOC no matter if you think you will invest in the property right now. You would wanna have access to cash when you find a good deal or if the market comes down, you would wanna grab that opportunity.

2) Unlike, getting a new mortgage, HELOC payment won't start unless you have used the fund. Thus you will not pay thousands of dollars on the loan when you are not using it.

With the same thought, if you have access to good deals why wait to get 20% down when you already have access to cash. People would die to be in your position. HELOC is cheap money, and you will get to deduct the interest against your rental income as well.