Financing help/need advice how to proceed

[Helen Kolton]

I need advice how to proceed:

I am a new investor.

We've purchased SFR last November. Now I am very actively looking for our first rental property-2 or 3 family. I am also trying to arrange financing ahead of time so that we will be ready when the time comes.

I have several options but do not know which one is best to fit my investment goals. I like to add a property about every other year. Any and all advice is very much appreciated.

Option 1

Use line of credit (35K) at 7.85% for down payment (plus some of my own money) to get to 20%. Then conventional mortgage; I was told I need to put down 25% instead of 20%; (I think that’s too much money to lock up at one time) or

Option 2

Use FHA Financing (then I have to live at the property, which I really do not want) since we fixed up our house and currently live there. Originally we purchased SFR with an intention of flipping it but accountant said to keep it for 2 years. So we are stock for now.

Option 3

Wait until November (12 months) before I can refinance my current house with a higher appraisal and take the money out for our next rental. Most of the banks require at least 12 months seasoning before they can use new appraisal. We purchased an old estate home, which after we fixed it worth a lot more than what we paid for it back last year.

So for now I am a bit confused as to which way to go about purchasing our rental.

Thank you veryone.