Buying rental property with little cash?
What’s the best way to purchase a rental property with little cash? I currently own my primary residence, but don’t have a lot of extra cash lying around to purchase a rental property. Can I use the equity in my home for the down payment?
Tagged with: extra cash • rental property
Filed under: Buying Rental Properties Questions
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Yes, you can use the equity in one property to buy another. In fact that is how the majority of people get started.
probably, but i would be careful because owning a rental is going to require repairs which requires cash.
i will tell you from experince. Cash flow is the most important thing with rental property. You MUST have the ability to pay the mortgage each month even if it’s not rented. Plus there are expenses.
Since you have no cash, you will be living month to month waiting for the rent to come in.
NEVER use the equity in your house. You could lose both.
If you do the numbers and you are breaking even each month, this is trouble. Your TOTAL expenses should equal at least 75% of income. For example. If your rental income is 1,000 a month, your TOTAL expenses shouldn’t be more the 750. 50-60% is better.
CASH FLOW is the most important or you will lose everything.