HML vs Cash

[Gurjot Grewal]

I have been looking for a duplex to purchase. Im a Canadian investing in the Us. Due to this my financing options are limited. I have had a hard time finding the right multifamily property at the right price. The market iv chosen is still very competitive. 

I’m thinking about adjusting my strategy and targeting more single family homes. I have about 90k cash to invest. I would purchase all cash, and take out a personal line of credit to use as the rehab fund, interest for this would be around 8% but I would only take out what I need and pay it off as I go. I would look to target lighter rehabs in the range of 20-40k.  

The other option is use a HML who will lend on 70% of ARV and 100% of rehab. But this comes with a high interest monthly payment and well as lots of other fees. To me the all cash seems to make alot more sense. What does BP think? Would one be riskier than the other ? With both I would refinance with a 30y fixed loan.