HML or HELOC to move on next deal

[Justin Green]

Looking for insight and happy to hear other options. Thank you all in advance.

Next move- Buy and hold duplex rental buying 50% of ARV 225K to 450K. Rehab 75K cashflow $4-500 a month doing my own PM using conservative rent numbers. This is a fairly good deal and cash flow for my area considering no cash in. No seller carry. Seller wants funds now. My options below:

Option 1

HML short term loan. Rehab financing 40 days after acquisition to wrap repairs and HML payoff in take out loan. Investment renovation financing can go to 75% after repair LTV. HML adds 6-10K to borrow the 225K ( I may need some cash in depending on HML 10% or less) Take out loan ends up about 325K PITI $2100 a month rent $2500 I will push for $2800 at first an tick down. May push rental rates higher if I chose some higher end finishes. Targeting upper middle class rental market. This option put little to no cash in on the whole deal with 25% equity for another exit or next acquisition.This is a 2 step deal so double finance fees.

20 doors in 10 years is my goal this will make 3.

Option 2

Pull equity from rental and primary residences both have close to 100K-125K each going to 75% LTV rental and 85% LTV primary. This would tap all available equity I have right now and I still need rehab capital. Renovation loan would take out the HELOC as well. I dont have the cost of the HELOC currently, estimate 7K. This does transfer risk to my 2 properties during HELOC should something go bad. I can get out of the duplex fairly fast and not take a bath I am a broker.

Bottom line. I need 225K to acquire get title in my name then renovation loan to take out. I am told lender can take out renovation within 40 days. I am moving forward with the backend loan now to ensure I dont get stuck with the HML or HELOC or whatever source of capital I use.

I appreciate feedback.