Refi primary for investment cash???

Advice please…

I am looking to buy rental property and in my neck of the woods, 20% down will still incur neg. cash flow.

I’m confused as to best course of action as far as financing. I have $50K (which would cover the 20% down of prop. looking at).

One recommendation I got is to refi my primary and take out cash for investment. Other person says, “No way”!


if you are cash neg at 20% down, then why do want to buy this???

Reasons for investing would be appreciation, tax benefits.

I buy for longterm appreciation, but aim a bit lower in the rental market. Depending on where you are, you should probably be able to find breakeven or positive properties, especially with 20% down.
Good luck,

don’t where you are, but if you are investing and counting on appreiciate then you should have sufficent resources and/or excess income to put into the property. While I don’t think the RE market is going to plummet tomorrow.

Also, you need to calculate at what point are you really making a profit. IMHO, many people do this incorrectly. If you pay $100k to day and sell it for $140k in 3 yrs it might sound a great investment. …but if you pay 5% commission to sell and you have say $300 neg. per mon after taxes, insurance and reapir. Then you have really only made about $22k. That’s a nice return on your $20k investment, BUT you need 12% appreciatation to get that return. Depending on what market you are in, that may or may not be do-able.

My point is work the numbers and see if the final result is what you want.

one other point is that you will pay about 6% interest on teh $20k down which is about $3.5k over the next 3 years. After tax that about $2.5kin cost… So in the example above, you profit is now less than $20k even thought the house has gone up $40k.