Tiny house conversion or buy duplex

[Lei Luna]

I have plans on converting my garage into a tiny house to do STR with. This will generate 2000-2500 at least a month once it's up and going. Target budget for the conversion will be 35k. Reality, this conversion probably will take a year... hoping no more than 6 months!

I also want to buy a duplex, assuming there is one available... or a house, but preferably a duplex. No more than 200k if I can find a duplex for that much, there is 1 available with tenants right now for 180 (needs work). I want to convert it to an STR. Kinda up in the air with the whole tenant situation since we are living thru covid times. So the 2 would generate 4-5k a month at least. 2000-2500 per unit. Now if it's just a house, I'm not sure how much STR would bring in during these covid times right now... would aim this at 2500-3000 on the low side.

I have a HELOC to use. If I did the garage first, and it took a year to do, i would be sitting around with some debt before I can generate income.

If I got a duplex or a house, I would still have to wait around to start generating income because still needs some remodeling.

Which route would be best to do first? I assume they would look at the debt to income ratio for the house investment. if the garage was done first, that would be some debt sitting there compared to no debt now if we got a house/duplex first then did the garage. The garage would easily be paid off fully within a year once things started going though and everything would be profit afterwards. I assume the house/duplex would give some tax breaks, but how much really?

Anyway, which route would you go first? What if you are wanting to do both in a years time? I’m conflicted that there could be a bunch of properties coming up on the market with covid around and won’t be able to snag if we do garage first. Would have enough heloc to cover downpayment and garage, but the debt to income ratio is what I’m worried about with the bank.