Skip to main content
This Board Has Moved

This board has been migrated to our new platform! Check out the new home page at discussion.fool.com or click below to go directly to the new Board on the new site.

Go to the New Site
Message Font: Serif | Sans-Serif
 
No. of Recommendations: 6

You already have this message marked for reply in your Favorites.

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 interst rates are reasonable. Any other ideas? Are no money down ideas realistic? Dean Graziozi mentions several of those in his books.

What difference does it make whether the loan is against your primary residence, against your first rental property or against your second rental property?
No matter what you're going to be sending the bank principal and interest for that loan.
So IMO doing a higher interest rate loan on the 2nd rental property so you have "increased cash flow" on the 1st rental is a net negative to your overall financial health.

Now there might be some tax consequences depending on the loan structure, so you should probably think about that as part of your considerations.
But IMO your wife hasn't thought through that the "increased cash flow" coming into one pocket just means you have increased cash flow going out the other pocket.
That - or - she would rather you sell some of your other investments and get the downpayment from that.
Print the post  

Announcements

When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.