Taking a look at different financing options...

[Aaron Bard]

[Copied from my post in "General Real Estate Investing"]

FUNDING UPDATE:

Hi everyone, thanks for keeping up with me and my undying drive to acquire this property (off-market value-add duplex in my market).

I spoke with my lender and the idea came up of pulling a HELOC on my 3-Unit house hack (which I bought some significant equity in) and using that line of credit for the down payment of a DSCR loan.

However, she did warn me that both HELOC and DSCR rates are insanely high at the moment, but she said that it's a possibility if I can make the payments.

The plan is that I would refinance after the property rehab to pay off the HELOC and the rehab costs, then probably just keep it as a DSCR loan or refi into a 20% down conventional. I'm not really sure about that part yet.

Moving forward, I have a lot of things to think about and any little shred of advice or insight is beyond helpful, so feel free to reach out and chat here or via Instagram or email.

Thanks BP Fam!

[Nicholas L.]

@Aaron Bard

there's probably another post on this topic i haven't read. 

but... do the math. you would need to significantly boost the ARV of the duplex in order to refinance it and pay off debt. not 10%... not 25%... more like a 75 or 100% increase from purchase price usually.

and as others have said you don't want to buy it with a DSCR loan - you want to buy it with hard money / bridge money and then refinance into a DSCR loan.

using a HELOC for the down payment just puts tremendous pressure on you to boost the value. if the appraisal is low now you're stuck paying the HELOC back yourself. not the end of the world, but paying off HELOCs with our own cash / savings is not why we invest in real estate.