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FoolishJeff: "I'd like to buy a 2nd rental property in the next few years without taking money out of the 1st one - it will be paid off in 3 years and my wife wants the increased cash flow. What do you think is the best way? I was thinking of doing a HELOC on my primary to come up with the down payment, assuming interest rates are reasonable. Any other ideas? Are no money down ideas realistic? Dean Graziozi mentions several of those in his books."

I am not familiar with Dean Graziozi or his books so no comment thereon.

Most of the no money down ideas I have read seem to rely on finding a desperate or innumerate (or both) Seller, but otherwise have not ever made much sense to me.

Why does it make sense to put your house at risk (via a Heloc or even a HEL) then a loan on the first rental property?

And the only way that your cash flow would be better via a loan on you home versus the first rental is the difference is by the difference in interest rates, unless your wife gets all the cash flow from the rentals and you pay the loans on the home. In that case her cash flow is better and yours is worse, and you have the added risk to your home.

You could see if you could negotiate for the Seller to carry a second mortgage on the second rental but the interest rate would likely be higher for the added risk and your first would need to approve.t

Sell some of your other investments to gather the down payment and closing costs for the second rental.

Regards, JAFO

PS - And I assume that y'all are holding appropriate reserves for non-annual expenses and capital repairs and improvements for the first rental from its cash flow and not simply spending all the free cash flow on current consumption.
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