HELOC or.....?

[Steve Simpson]

One of my investors has a lot of cash but does not want to have it all tied up in his properties. He currently owns 2 rentals which he financed 70% at good rates (around 7.5% I believe). He bought both of those off the MLS using traditional financing. I am trying to explain to him the value of buying our next property with cash to get a better deal and then pulling the equity out with a HELOC or other form of debt. I have never done this before but it seems easy enough.

So, is the easiest/best way to do this with a HELOC or would it make more sense to buy it cash and then 'sell' it to ourselves with traditional financing? I'm sure it's a situational question, so let me say that we plan on either holding it as a mid-term rental or selling it with a lease/purchase in hopes of closing between 3-5 years.