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Landlording & Rental Properties
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Collateral vs Down Payment
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