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thanks for the encouragement... I guess :wink:

How can you say the 25% downpayment is negative? You are not losing it, it's still there!

OK. let me dumb this senario down a lot.

negative $500 cash flow/ month *12 = -$6000
House price 350K * 5% appreciation (this is being very very conservative based on the history appreciation in Seattle) = $17500
I'm in black for $11500!!

Why not? Let's say I use half of that to cover vacancy, maintenance, etc. I still come out on top. Is that so bad? (I'm being somewhat rhetorical here)

This is Seattle area.

I have a full time job and I don't want to go into rehabbing. I have no idea how to go about foreclosures. Don't you need the entire purchase price in cash to buy foreclosure? Man, I sound so clueless.

I know that's stupid question.

I just don't see how I can start my first investment with positive cashflow. I would be banking on the appreciation. Is that really wrong? You gotta start somewhere right? If I can weather it through for 5 years with the cash I already have, wouldn't it be worthwhile? say 5% appreciation for 350K house for next 5 years in seattle. I think that's conservative number?

I really want to jump in, but my numbers say "I shouldn't do it." Did everyone start their 1st investment with positive cashflow?

15 will be the line of credit at fixed rate option at 7.3% I'm not planning on using that. In my situation, 80/15/5 is a better deal after considering PMI tax if I were to do single 95 with 5% down payment.

I meant the house I'm leaving in when I said 1st house. Yeah, so you are right. I'm getting my personal property involved. But like I said, I'm going to try my darnest not to touch it.

I know you want positive cashflow, but is that a golden rule of REI? I mean did everyone start off with positive cashflow? I don't think it's ever possible with the house market I'm interested in. I'm not interested in out-of-state investment. I want my first rental property to be nearby.

Thanks for the feedback juzamjedi,

What's your definition of "long term" and why the fixed rate would be better than 80/215/5 for long term?

a newbie here. I'm interested in buying a rental investment property. My brother started his investment 2 years ago and he's doing pretty good. He has recommended to take the equity loan as much as I can from my first house and make smallest possible down payment on the 2nd house. His logic is that if I get comfortable with being a landlord, I will have extra liquid cash in the bank to buy 3rd house for rental. He says if I use up the cash, I will have to take another loan down the road.

So here is the data:
- equity on the 1st house is about 100k
- I'm looking at buying the 2nd house for around 350K
- I have good credit score around 790
- I have saving of $40,000

Based on the calculation, I will break even with my cash flow if I make 25% down payment on the 2nd house. If I do 80/15/5, I will deplete ~ $400 every month, but I'll have over 100k usable cash.

I'm not sure whether to make big down payment to minimize the monthly cash bleeding or keep the cash as much as I can in the bank for 3rd house. Or meet some where in the middle?

I'd appreciate any thoughts/feedback.