Newbie looking for financing info

[Rick Reed]

First off, I would like to thank everyone for the wealth of information on this site. This site has kept me from jumping in head first and making some potentially huge rookie mistakes.

I'm looking to purchase my first rental property and trying to figure out the best financing option for my situation, so I'm looking for some input from others that have more experience than me.

Scenario:

We have $130k in cash, of which we are willing to invest up to around $60k (the rest of the money is for emergencies and any unforeseen expenses/carrying costs not just for investment purposes, but for us as well.

We also have slightly more than $200k in equity in our pri residence.

We are looking to purchase in Collin County TX (Plano, Allen, McKinney) for around $170k max. Those familiar to the area know that property taxes are around 2.5%, so taxes eat into cash flow quickly. I'm considering taking out a HELOC against our pri residence plus the $60k cash for a total of $160k to hopefully leverage a deal (thinking a cash offer could sweeten a deal to make up for the high property taxes)

Idea:

Potentially get a better deal for a cash purchase. Is this true? (It's very difficult to get close to the 1% rule down here, if buying at market prices.)

Pay back the pri residence HELOC shortly after purchasing the rental by taking a HELOC against the rental (looking to get the pri HELOC paid off ASAP.

Questions:

- Does such financing make sense?

- I've read others doing something similar by refinancing a cash purchase. Does that make more sense than a HELOC against the rental? How does one refi a paid off property that they own outright? Is this a purchase from self?

Anxiously looking forward to see responses. Thanks in advance!

Rick