Which investment route to take?

[Faysal Alam]

All right, let me tell you guys about my current situation , i’m thinking about going down to very different routes. Let me know what you guys think

I have about 70 K in liquid cash

$250k in a heloc , so total is $320k I’m working with

Option 1: Go 5% conventional on a two family home which would be about 90 K with down payment and closing costs , I am preapproved for 950 K . Live in one unit , rent out other unit and accessory unit, mortgage on the property would be about $6800, rental income would be : $3000 from additional unit , and $1500 from accessory unit and I would be occupying one unit , leaving me at negative $2300 per month .

Option 2: I found a house that the asking price is 930k , but I’m sure I can get a discount on it because it needs a lot of work , it doesn’t qualify for traditional financing , so I would need to take a hard money loan , it needs about 150k worth of work , the plan would be to offer the full 930k asking price but ask for a 6% seller concession , I calculated 20% down payment and 7% closing cost , so total after seller concessions comes out to 21% down payment which is $195,300 . Hard money lender would finance 70% of repairs so 105k out of 150k and I would put in the other 45k . So all in I am at $240,300 , hard money I am factoring in as 15% rate and since I’m borrowing 840k for let’s say 6 months , I’m factoring in hard money costs at 63k for 6 months

So now all in I’m at $303,300

ARV should be at least $1.3 million (conservatively)

I would cash out refi with a dscr loan and get back 975k , I would pay the $840k I owe to the hard money lenders , leaving me with 135k , and I would pay myself back with that money , and since I would have $303,300 invested , I would pay back 135k to myself leaving me with $168k invested in the house with a equity position of $325k , the actual house number are such after the cash out refinance:

This house has 2 units and 3 accessory units

Mortgage : $7100

Heloc payment : $1300

Total = $8400

Live in 1st floor

Rental income 2nd floor : $3000

3rd floor: $1500

Accessory unit 1 :1200

Accessory unit 2 $1200

Income : $6900

Net : negative $1200

I also already have a house that’s breaking even , but I’m living in one unit and if I move out that house would become positive $1500 which I can put toward the payment of one of the other houses .

Which route would you take and why ?