Collateral vs Down Payment

[Dominick C.]

Looking to invest in my 2nd rental property using collateral (my first building) to cover my downpayment.

This commercial property to purchase, as was the first. So 25% is needed.

Short overview: Property is 200k, downpayment is 50k (collateral). Mortgage lender is giving me full 200k at 4.25%, 15 yr mortgage.

Property to purchase after mortgage and full operating expense including vacancy rate3%, maintenance, capital exp, positive cash flow $600 month.

Higher mortgage now, less money in pocket vs lower mortgage, little extra pocket money and some equity to start.

Question: How do people feel about collateral vs down payments? Thoughts?

pros/cons/benefits/concerns

D