Buying my first rental.

[Matthijs Pol]

Hi everyone! 

Very new to this, reading lots of books on how to start up my portfolio.

Where I get stuck is how I should finance my first rental. I bought my own house a few years ago and now have quite a bit of equity in my house (thank you Nashville market).

I could buy a rental straight up  using the equity from my house or I could get a business loan and use some of the equity of my house as the 20% down payment. Any advice what I should do? 

Thanks!

[Reid Chauvin]

@Matthijs Pol - Despite interest rates being higher than they've been for a few years, I think most people on the forums would still advise you to use leverage (i.e., a loan) and to not buy the home with cash. This is not a good environment to be illiquid in. Whether or not you should do a cash-out refinance or a HELOC to tap into your home's equity will depend on your unique situation, how much money you need to borrow, your projections for the rental income of the new property, etc. The most challenging thing in the Nashville market is going to be finding a property that cash-flows enough to help you pay off your new debt. That's not to say it can't or is not being done though.