Newbie from Massachusetts

[Vy Mai]

Hi everyone,

My name is Vy.  Recently, an idea just came to me that I should take out home equity loan to invest in a rental property. I've always thought of equity loan as a taboo kind of thing but for some reason, I feel like it is the right choice for me right now.  I can take out $67,000 from my main residence property.  My question is: should I find a place near Boston areas or a place near Umass Lowell.  I'm leaning toward Lowell area as I will probably find cheaper property, hence less risky as a new investor. Any advices or inputs will be much appreciated.

Thanks

Vy

[Rob Beland]

One thing to consider Vy is your personal debt/income is going to be the basis of the banks credit decision. Wothout the $67K cash in hand its not likely you will get financing. If you use the equity and cash out you are now bringing on $67K more debt. You will have to show the bank you can support the new debt without relying on your income property. I personally think its too risky to use the equity. You're essentially financing 100% of the income property which is risky. You may need that equity someday for a new roof, furnace, etc...Its tough to comment not knowing your personal financial situation but my instinct tells me hold off on investing until you have some money saved up.