Financing Advice /Tips

[Nadya Babanskaya]

Hi everyone! Newbie here looking to jump in and buy my first rental property very soon. I keep going back and forth on financing it, here are the 2 options I’m looking at and would love if anyone could help me walk through the math and see what’s the better or more logical choice:

1. Get a regular conventional loan and put 20% (25-30%?) down. Not trying to buy a complete fixer upper so hopefully no issues qualifying. I understand that my offer would look less attractive than a cash offer.

2. Get a HELOC (saw an intro rate of 3.99% for first 6 months locally), buy with cash, immediately apply for delayed financing, get 70-80% of the purchase price back to pay down HELOC and pay the remaining 20-30% with my money (and perhaps (hopefully) some cash flow if rented right away) within those 6 months during the low rate period. This way my offer is more attractive as I'm buying with cash but I'm still only using the same 20-30% of my own money in the end (plus delayed financing closing costs, not sure how much those are).

What do you think is a better option, am I missing something or are there better options I’m not considering? Would love any input, tips or advice from more experienced investors.

Thank you!