Access to Capital - What to do next

[Phil C.]

Currently me and a partner own and manage 12 units. We are looking to add more units and grow but are not sure exactly the best way to do this. I know we have access to capital using debt financing (~$100k or more @8% - Structured as a LOC) but we also think that we have a lot of interest in structuring an equity deal - $100-$500k. By the spring we should have enough cash (in addition to our reserves) to put a down payment on another single-family or multi-family property (4 units or less). The way I see it we have the following options:

1. Buy another SFH, Duplex, Triplex, or Quad using our own cash and a LLC Bank Loan - $20yr amort, 5 year term 6.5% rate
a. Least amount of risk
b. Less complicated
c. Slowest growth – takes more of our own cash, and restricts the size of the building/investment

2. Use debt financing at 8% in addition to our own cash to purchase a larger building using a combination of the above plus our LOC at 8%.
a. More Debt = More risk
b. More Growth – can purchase a larger building (or more smaller buildings) by using a combination or our own and OPM

3. Structure an Equity Deal
a. Most Risk
b. More time and effort to set everything up, structuring, legal fees, etc.
c. Potential for most return and growth – we would get property mgmt and financial mgmt fees on top of a share of the Return on the investment
d. This is by far the most complicated but could have the biggest return and fastest growth
e. Never done this before so I anticipate a steep learning curve

So, I am curious as to what others would try to do in this situation. Just looking for opinions and advice on moving forward.

Thank you in advance for your replies.