Best approach to investing equity

Tampa, Florida
BRRRR - Buy, Rehab, Rent, Refinance, Repeat
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Best approach to investing equity

Kyle Badger
Member since 2025 · 2 posts · 2 votes

Hello I am brand new to the experience of real estate investing and am looking for opinions on how to approach our first investment property purchase. We currently have a good amount available as cash equity in our primary residence. We are looking to invest this money in real estate and put it to work. Would the best approach be to find a cheaper home that would generate cashflow, and pay cash for it. Or is the better option to put it as a down payment on a more expensive home that would also generate cashflow. In both instances, the goal is to continue to use the equities of the homes we purchase to buy new real estate/investments. Greatly appreciate any and all opinions. 

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Stephen Horan
Rental Property Investor · Rocklin, CA · Member since 2018 · 42 posts · 9 votes
1y

I would analyze the prospective purchase and conpare the numbers. consider appreciation, cashflow, principle into new loan, and consider after tax effects ie writeoffs such as mortgage interest, depreciation, property tax

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  • Stephen Horan
    Rental Property Investor · Rocklin, CA · Member since 2018 · 42 posts · 9 votes
    1y

    I would analyze the prospective purchase and conpare the numbers. consider appreciation, cashflow, principle into new loan, and consider after tax effects ie writeoffs such as mortgage interest, depreciation, property tax

    1Reply
  • Nick Velez
    Lender · Member since 2019 · 250 posts · 219 votes
    1y

    @Kyle Badger

    Congrats on taking the first step! Your financial position and future goals will dictate what route makes the most sense but in your example, if you want to use the homes equity to continue to buy more real estate, it likely makes the mosts sense to leverage. 

    Sure, you might cash flow more if you buy a cheaper property cash (but not always the case), but it is going to take a long time for the cash flow to equate to another down payment. 

    I would figure out what strategy you want to utilize and from there decide whether its better to dump the money into one larger property, or a few cheaper properties. Tampa offers a lot of options and I highly suggest you connect with a local expert such as @Josh Green to help you strategize. 

    Best of luck!

    1Reply
  • Josh GreenBusiness Member
    Realtor · Tampa/St Pete/Clearwater/Bradenton · Member since 2020 · 396 posts · 353 votes
    1y
    Quote from @Kyle Badger:

    Hello I am brand new to the experience of real estate investing and am looking for opinions on how to approach our first investment property purchase. We currently have a good amount available as cash equity in our primary residence. We are looking to invest this money in real estate and put it to work. Would the best approach be to find a cheaper home that would generate cashflow, and pay cash for it. Or is the better option to put it as a down payment on a more expensive home that would also generate cashflow. In both instances, the goal is to continue to use the equities of the homes we purchase to buy new real estate/investments. Greatly appreciate any and all opinions. 

    Completely depends on the amount you’re playing with 👍. Shoot me a text and I’d be happy to call and go over options based on your situation
    [email protected]801-441-8891
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  • Jorge VazquezBusiness Member
    Real Estate Broker · Tampa, FL · Member since 2017 · 1k+ posts · 695 votes
    1y

    Hey Kyle — great question, and welcome to the journey!

    After investing in 30+ rentals over 20 years, here’s what I’ve learned: To know what your last property should be, you first have to know what your first one should look like. The right strategy always comes before the right deal.

    Here’s the key question: How much cash do you really have to work with?

    If you’re low on cash, focus on equity-based strategies like BRRRR — build value, refinance, repeat. That way you grow fast and let the equity snowball. If you're cash-rich, maybe lean into cash flow from day one. But I'll be honest — I usually go after equity, then let inflation take care of the rents and future cash flow. It’s a long game, and it works if you’re patient.

    In Tampa, you’ve got solid options either way. If you want to run through some ideas, happy to connect.

    — Jorge Vazquez

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    • Kyle Badger
      OP
      Member since 2025 · 2 posts · 2 votes
      1y
      Quote from @Jorge Vazquez:

      Hey Kyle — great question, and welcome to the journey!

      After investing in 30+ rentals over 20 years, here’s what I’ve learned: To know what your last property should be, you first have to know what your first one should look like. The right strategy always comes before the right deal.

      Here’s the key question: How much cash do you really have to work with?

      If you’re low on cash, focus on equity-based strategies like BRRRR — build value, refinance, repeat. That way you grow fast and let the equity snowball. If you're cash-rich, maybe lean into cash flow from day one. But I'll be honest — I usually go after equity, then let inflation take care of the rents and future cash flow. It’s a long game, and it works if you’re patient.

      In Tampa, you’ve got solid options either way. If you want to run through some ideas, happy to connect.

      — Jorge Vazquez


      80% LTV on our primary residence would put us as having approximately $168,000 cash equity to put as down payment or purchase home.

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  • Christine Mulkins
    Rental Property Investor · Medford, OR · Member since 2017 · 94 posts · 115 votes
    1y

    I would definitely use leverage to buy your first rental as your ROI will be a lot higher than just paying cash.

    0Reply
  • JooYung Choi
    Realtor · NJ · Member since 2023 · 215 posts · 99 votes
    1y

    Cashflow is cashflow at the end of the day. If it's the same, I'd personally want to own the more expensive home. 

    Something to think about: 

    It's very hard to get a HELOC on a rental property. So I would recommend living in the property (ideally 2 out of the past 5 years) and getting a HELOC before you move to your next property.

    If you're cash out refinancing for a better interest rate, then that's fine. But you also have to think about the new PITI payment which will most likely be more since you're pulling the equity out.

    Good luck!

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  • John MorganPro Member
    Rental Property Investor · Grand Prairie, TX · Member since 2018 · 2k+ posts · 2k+ votes
    1y

    @Kyle Badger

    I got into real estate 10 years ago by pulling equity out of our primary. First I did a HELOC and bought a couple houses for cash from the HELOC in a two year time period, using savings and 401k loans. That was dumb, because my ROI off my two paid off houses was like 5 or 6% after all my expenses. Lol. I was a Dave Ramsey guy at the time, until I read Rich Dad. Then I decided to do cash out refis on those paid off rentals and my primary to scale up. I'm a fan of using equity just sitting there doing nothing for me to leveraging it to scale up. I was able to buy 15 rental houses from recycling equity with cash out refis. It felt like I was buying good cash flowing rentals for free since I wasn't using any of our own money out of pocket to buy more and more properties. My wife wouldn't let me use our savings to buy rentals so I had to get creative. This is how I somehow ended up with 29 SFR after 10 years with this hobby. So yes, I would do a cash out refi or HELOC on your primary to buy rentals. Nothing wrong with paying cash for properties, but I would recommend paying cash with the intention of pulling the cash back out with a cash out refi later on to buy more and more properties with the cash. I bought 15 houses with cash then pulled out the equity later to use to buy more and more. I was able to get really good deals paying cash for homes and taking most of them "as is" with tenants in place. Then do cash out refis later to grab my cash back to buy more and more. Then kept repeating. It a good way to scale up fast and ramp up your monthly cashflow. Good luck!

    0Reply
  • Kerlous TadresBusiness Member
    Realtor · Columbus, OH · Member since 2023 · 1k+ posts · 1k+ votes
    1y

    If your goal is to build a portfolio and keep growing, using your equity as a down payment on a financeable property is usually the better long-term move. It allows you to leverage your capital, maintain liquidity, and scale faster. While paying cash can give you higher monthly cash flow and less risk upfront, it ties up your money in one asset and limits your ability to buy more properties. If the numbers work, financing with a strong down payment gives you both cash flow and the ability to grow, just make sure to run the numbers conservatively and keep some reserves.

    [email protected]614-490-1163
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  • Rick Stout
    Realtor · Tampa/ St. Petersburg MSA · Member since 2018 · 25 posts · 13 votes
    1y

    Hey @Kyle Badger, congrats on jumping in to the real estate investment world. It's a great time to start. Your situation is unique to a lot of different variables. risk tolerance, current equity in primary, cash on hand for overages, etc. To BRRR, I would suggest having the cash and reserves for the Down payment, then using equity in your home for the reno's. Underwriting is going to be very important in a deal like this and using your own equity, but I wouldn't recommend using your equity as a down payment, then getting money from someone else for repairs becuase you would then be 100% leveraged. Happy to connect and discuss further.

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  • Margie Cindy Santos
    Lender · Member since 2025 · 19 posts · 6 votes
    1y

    Hi Kyle, is the primary residence generating any income (like a househack)? If not using leverage should give you more upside for both cash flow and equity (albeit off course more risks). If you have the risk tolerance, then you should be able to to make a higher return given your investment will have positive cash flow.

    0Reply
  • Amber Stout
    Lender · Tampa/Saint Petersburg, FL · Member since 2014 · 356 posts · 148 votes
    1y

    Hi Kyle, I’d say it really depends on your goals and risk tolerance, but here’s what I often suggest to my clients and what I do personally as an investor:

    If your goal is to build wealth and scale, I’d lean toward leveraging the equity as a down payment rather than paying all cash. This allows you to take advantage of real estate’s power to scale through leverage. For example, instead of putting $200K into one cash flowing property, you could potentially acquire 2–4 properties with financing and spread your risk while growing your portfolio faster.

    If you’re leaning toward more expensive homes, just make sure the cash flow still works after all expenses (including financing, maintenance, taxes, etc.). Sometimes higher priced properties don't cash flow as well unless you’re in a short term rental market or adding value through renovation.

    Also — if you ever want help with financing options, I’m a mortgage broker and investor myself, so happy to walk through numbers or help you strategize. There are some creative ways to keep your cash working while still getting good returns.

    Happy to connect anytime! :)

    0Reply
  • Alex Hunt
    Lender · Member since 2022 · 441 posts · 134 votes
    1y

    Hey Kyle, since your long term goal is to continue to purchase homes while having some cash flow. I believe the best way to do, would be to if the amount you can take out of the primary residence is enough for 2 rentals or 1 larger maybe multifamily then do that. As this will get you the most assets for you buck. If you buy in cash, from day 1 of closing you can do a cash refinance, which is like a rate n term refinance. You get 80% of the cash purchase price back on a 30 year fixed & then can use the cashout as down payment on rental #2

    You can either buy it in cash, then you are just paying the HELOC/ 2nd & generating more cashflow. Other option is to use the HELOC/2nd as down payment, then you are paying the 2nd & the mortgage on the new rental, so cashflow will have to be high. Are you looking to do regular/ long term rents, short term rental?

    Any cash flow or lending questions. I am happy to help!

    0Reply
  • Deborah Wodell
    Lender · Sanford, NC · Member since 2024 · 352 posts · 117 votes
    1y

    Hi Kyle — welcome to the world of real estate investing!

    Both strategies can work, but it really depends on your goals. Paying cash for a lower-priced property gives you simplicity and less risk, while using your equity as a down payment on a leveraged property lets you scale faster and potentially earn more — as long as the cash flow covers your debt and expenses.

    If your goal is to grow your portfolio, leveraging your equity with smart financing could be the better long-term move. Just make sure the numbers make sense and you have some reserves.

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