All Forum Posts by: Jonathan Fuchs

Hello - we own a rental income property (100% equity) in Southern California and are preparing to buy our second rental income property (out of state). I am trying to determine what is the best way to get cash out of the current property's equity to use as a down payment on our second property; cash-out refinance or HELOC? I was wondering if anyone has had recent experience with this in CA and what would be the best method vis a vis today's rates, points charged, types of lenders to approach, etc.

The current property is easily valued at $400k+ and our base assumption is to access and use $100k as a down payment on the next property. Planning further ahead, we could do the same with a third property (another $100k down payment, leaving $200k+/50%+ equity in the first property so it still cash flows).

Or is there a better way entirely to get that cash? That is just my initial thought process, I am curious if any of you experienced investors approach this situation in a different way? Thank you!

@AJ Shepard thank you, that is the bit on information I was missing! That the rental revenue is counted additional income for us. Thanks for the other tips as well. Our investment in Houston will be dependent on finding an area in or around town that does cash flow, assuming they can still be found. Duplex or more is also a possibility.

Hello BP,

My wife and I own one rental income property (outright, San Diego) and are looking to invest in a second or more (Houston area) to increase cash flow. I have been reading the forum posts on the debate between buying all-cash and financing as we are trying to decide which to plan for (I guess cash-out refi on the current property would be a third option?). If the purpose is to increase cash flow in absolute terms, the avenues to that seem to be 1) buying all-cash or 2) financing and using leverage to acquire multiple properties.

For example, one might say we could buy one property for $250k call cash, or buy 5 properties for $50k down each to achieve the same cash flow. My questions is - how does the financing in the second scenario work in practice? How would we qualify all those loans? Is realistic to assume we can get so many loans? How do our personal financial pictures fit into it? How long would that take to get up 5 units? Meanwhile, we plan to take out a mortgage on our primary residence as well.

Thank you for your input and please do let me know if there is something wrong or too simplified in my assumptions. Lot's of great information and discussions on this site, it has been a wonderful resource for our REI education.

Jonathan