I recently bought my second investment property. Closes in a month. I’m faced with a dilemma if I should down payment with cash or use existing equity from other property. What would you suggest and why?
I believe it depends on your goals and how much equity you have built up. For me I would rather build in my properties for a potential portfolio loan or heloc down the road allowing me access to cash for BRRs and quick deals I can refiance later so I am trying to use cash as much as i can to build my portfolio. Also feel like it naturally won't let me get too far ahead of myself if I have to save for the downpayment.
@Steve Gibbs if you are under contract....do you have enough time to take the equity out of another property? Do you already have a LOC on that property or something?
@Steve Gibbs - How quickly can you accumulate that cash again?
I'd pull from the equity if I'm cash poor for the foreseeable future
I'd keep cash for needed repairs, renovations, or emergencies that might come up....it'll take too long to pull from equity when you really need it.
@Jared Hottle Thank you for your comments. I’m thinking equity at this point as cash gives me freedom.
@Andrew Postell Thanks for comments. The other properties are on mortgage but have appreciated enough for me to access equity. I have a good amount of time to get it all sorted out.
@Michael Ablan Excellent point. It might take a while to get cash accumulated. Thank you
@Bruce Woodruff Totally agree, good to see lots of comments aligning to using equity.
@Steve Gibbs yeah, if you have the time to go through a loan to get the equity out (45-60 days is common) then explore that option first. You can always just go back to using your own cash if that doesn't work out.