Personal equity line for rental down payment

[Ryan Unterreiner]

I have a property in Copperhill TN that is $300,000. I have analyzed this property over 50 times and the numbers work with an almost 14% cash on cash return. It would also cash flow over $600/month. I want to take action on my first property but wanted to ask what everyone thought about using my personal home equity line as a down payment? Or should I save up more money and leave my equity line alone. It would take me quite a long time to replace or pay back the $60k I would take out but it would leave me with 60k still left on my equity line to buy another property. Any insight would be appreciated!

[Todd Rasmussen]

@Ryan Unterreiner

Everything that you have said suggests that a cash out refi or a second mortgage would be more appropriate than drawing on a HELOC. For me the risk mitigation that made it okay was being able to afford the additional debt service without the real estate income. If you can handle the added payments without REI then it's a no brainer, if you'd rely on that cash flow to make the payment on a second then you should take some time to make sure you are willing to take that risk.