Downsizing House to Invest in Real Estate?

[Alfie Park]

I'm currently living in a new house (~$400K) and am thinking about downsizing to a cheaper older house (~$250K) nearby, still in a good neighborhood, to generate cash for investing in several investment properties.

My mortgage on the new house is paid off, so if I put down 20% down on older house I would free up more than $300K in cash (realtor fees, transaction costs, etc.). This could then be used as down payment on several investment properties.

I do have 3 young kids so a bit worried about how we will transition as a bigger family to an older, smaller home. But anyone else have similar experience doing this?