New Member-MA-Looking to buy and hold my first multifamily home

[Brian A.]

Hi all,

I'm new to BP, I joined since I'm looking to buy and hold my first multifamily home in Metrowest Massachusetts (20-30 minutes outside of Boston).  This market has seen some big appreciation since 2013, but seems that things are starting to slow down a bit.   I have a few specific questions to start with regarding to my personal situation:

1) I currently own my primary residence and second home free and clear. I have a 400K and $220K HELOC on both properties, but I used up most of my cash when buying them. I have about $150k left in cash, but that is designated for other things (emergency fund, future upgrades to current houses, my business, cars, etc...). My question is when I buy my first investment property should I finance with a 75% first mortgage and use the HELOC for the 25% down payment to essentially obtain 100% financing with a lower cash flow or should I use 25% from my cash for the down payment to increase the cash flow.

2) if I do go the route of using my cash, what is the baseline ROI that I should be targeting. I've heard 10% but not sure how realistic that is in my market.

3) should I really only do a deal based off of cash flow and consider appreciation a bonus?