Looking to take a H.E.L.O.C to buy a rental property !

[Mark Coleman]

Is is smart to take home equity loan out to pay in full for a property or just use it for a down pay?

[Thomas S.]

Only use it on a rental as the minimum DP. The opportunity vale of cash will kill your cash flow if you have too much equity in a rental.

Mortgage rates at 4-5%, opportunity value of cash to investors 10%. Every dollar sitting as dead equity is losing 5% return or conversely sucking an additional 5% of your cash flow from the property. 

When you buy all cash, having too much equity, you are basically buying your cash flow and the property itself is producing nothing. The property is actually a liability as your cash could earn better return without the PITA of owning actual brick and mortor.