Should i use part of a home equity loan to put a down payment on another house?

[Rabia Khan]

Should i use part of a home equity loan to put a down payment on another house to rent out? 

[Chris Seveney]

Quote from @Rabia Khan:

Should i use part of a home equity loan to put a down payment on another house to rent out? 

I would recommend against it and here is why. When you take money from your HELOC, you are using 100% leverage on that new property. You are taking equity away from your home and getting back financing. It can be risky and if you yourself get into a situation where you have a loss of income, having a HELOC can be a saving grace whereas ifyou pull from it for a home and then cannot make the payment they will not allow you to draw on it.

For me, all about risk and risk tolerance, - which doing this for me adds a significant layer of risk.