Buying Rental Property with cash or should I get a loan?

[Joe Farrance]

We are in the process of getting hoarder house that needs a lot of work. It has been valued at $40,000 and needs about $50,000 in repairs. After fixing it up the houses that have sold in the area are selling for $130,000. 

My question is: Although I have the $40,000 cash to buy the house should I use my own cash to purchase the house and then use the equity in the house to get a home equity for the fix up and then rent it out and have the tenants pay me back? Or should I keep my money and use the equity in the house to purchase and do the fix up and have the renter pay for the loan?

[Joe Villeneuve]

That $40k is your seed money.  NEVER SPEND IT.  Once you do, it's gone and you have to start all over again.  Use it, as in 20% DP's.  You'll recover it from the CF much faster, and you can use it again.