Want to buy my first rental... HOW?

[Neal D.]

Well I decided that I want to run but I cant crawl just yet.

I need to figure out how to finance my first deal. So I will fill you in on my situation.

I currently own a home with a FHA loan at 3.6% interest for 30 years.

The loan is for 96k (owe 83K) and the actual house value is in the 125-135k range. I got it as a foreclosure on a VA loan from an expired man(motorcycle crash) and buddy was that a pain in the neck.

Should I do a cash out refinance or heloc on my house in order to get the money for the down payment or should I try to keep my monthly payment on my current mortgage as low as possible and try to get an Private lender to loan me the money? Is there a huge difference in the interest rates charged by using either of them. What are some of the advantages and downfalls to each?  

Or on a completely different note I could try to also flip this property and make some money by adding a master suite and bathroom but I would really like to rent it out for a while first then do the equity loan to add the master suite and bathroom then try to live in it because it is a great area of town.