Funding a down payment

[Powell Slinkard]

Hello Everyone,

A couple questions/clarifications. So from what I have gathered most people use a variety of means to fund down payments on new investment properties. I personally am planning on using the equity built up in my two paid off properties to fund my next down payments. My main question is when using the 50% rule to evaluate homes, don't you have to account for the home equity loan monthly payment(in my case) in the expenses for determining whether the property will produce a positive cash flow for the month? I feel like all the examples Ive seen only subtract the mortgage payment but dont talk about paying back the down payment?

I understand if you have saved cash you can fund the down payment that way. But if not what do other sources do people use to fund the down payment? and how do you calculate it into your expenses when evaluating a home?

Thank you,

-Powell

[Jon Holdman]

@Julie Falen the "50% rule" is a quick and dirty rule of thumb that says 50% of gross scheduled rents will go to vacancy, expenses and capital. From the remaining 50% you have to cover your debt service, if any. What's left is your true cash flow. Discussed at length in the Rental Property and Landlording forum.