HELOC vs personal capital for first 2 properties?

[Jordan Wood]

Good morning, 

I have been familiar with BP for about a year now, but I thought it was time I jump in here and start becoming a little more active in hopes of accelerating my investment journey. There is such a fine line between being prepared for my first deal and getting stuck in the analysis paralysis mode and I’m doing my best to skate that line. I am actively reading as many books and listening to as many podcasts as I can in my spare time, but at the end of the day, I think I have to jump in and start learning some hands-on experience in the investment world.

I think I'm ready to complete my first purchase(s) and I was hoping you guys could give me some feedback on a few things that are holding me back. For some background info, I'm 26 with a steady engineering W2, low DTI, and good credit score. My goals are to acquire at least 2 small multi-family properties in the Triad NC within the next 6-12 months. Whether they are 2, 3, or 4 units, I would like one of the properties to be strictly an investment property, and the other would be a live-in house hack with an FHA loan.

1) In terms of financing, I only have enough capital/reserves for 1 property, but I'm in the process of getting an angel investor to grant me access to a HELOC. From what I have seen in the forums so far, it appears using the HELOC to finance the down payment of a property is best suited for either flips or BRRR deals. Essentially, I want to treat the HELOC like hard money, but the timeline/payback period would be more forgiving. In terms of the logistics of acquiring 2 properties, do you think it makes sense to use my own capital to fund the FHA owner occupied house hack, and then use the HELOC to fund the down payment on the 2nd investment property? The other option would be to skip the FHA to avoid the PMI and use the HELOC to finance the down payment on 2 conventional loans and save my own capital as reserves for problems/renovations. Since I would be owner occupying one of the units, I'm not sure if I would be able to flip/refi the second property for enough to pay back the HELOC.

2) With the market in its current condition, finding a suitable deal(s) won’t be easy, but if it was easy, everyone would be doing it I suppose. Should I be concerned at all with purchasing rental properties right now with so many people being unable to evict non-paying tenants? Part of me wants to wait for it to blow over, but the other half of me knows I must start somewhere, or I’ll never make any forward progress.

Sorry for the long post. Hope you guys can provide me with some valuable insight.

Thanks.