Financing Investments on Unemployment?

[Account Closed]

Hi all,

I laughed while typing the title to this post because it sounds a little silly. Here is my story:

I'm completing my contract day job this week, and I have not yet found another. Actually, I haven't really looked for one! I was going to take a month or two off work to find just the right opportunity (and relax a little, why not?), as my income from my roomies + unemployment more than cover my monthly expenses. 

At the same time, I would like to purchase an buy and hold investment property out of state. I am from Sacramento CA and own my primary residence plus one more rental here, but am not impressed with the low cash flow, overheated market, and high barriers to entry for buy and hold investors. 

I currently have about 30k liquid cash and 145k equity in my primary residence. A cash out refi at 75% LTV would give me 60k cash on my primary residence.

I am wondering what I should do about financing my next investment. I can either wait until I'm back to work and use a conventional loan from fannie mae, or jump right in with a private lender such as b2r finance at an interest rate of 6.5%-7.5%.

My target property is ~100k, and I'm targeting the sweet spot where I can get optimal cash flow and good prospective appreciation. I'm willing to do a little bit of rehab (5-10k). For this reason I like Texas (but know there are downsides such as high property taxes and major investor competition), and I've even given thought to Indianapolis and Memphis. 

I have received conflicting advice from different professionals and investors so I figured I need more information before making a decision. What do you say BP? What are some of the pros and cons of each financing approach? Are there other approaches that would be more optimal? Do I just need to forego my vacation and hurry up and get a job? LOL

Thanks! 

Elliott