1st Purchase utilizing HELOC...what are my options?

[Steve Dora]

First post! I'm looking to buy a condo so I can rent it to my daughter and a roommate while in college and then continue to rent it out after she graduates. The condo I'm looking at just posted for $135K. For funding, I have a couple options, use my heloc (prime +0.5%) for the down payment and then conventional loan for the rest. It'll take a bit to pay back the heloc due to rent around $1200/month. My current idea is to offer a full cash (heloc) offer of $120K. After 6 months, I'd use my LLC to purchase the property for $150K. There are some comps out there around 150/160k. In the 6 months I'll be doing some rehab (paint, floors, some fixtures, new island, etc.). I then can pay off my HELOC. Based on my understanding, the loan for $150K w/ 20% down would be ~$1150/month (tax, hoa, and P/I). Are there other ideas to make this deal work? Thanks in advance!

[Jonathan Greene]

You have too many assumptions in there. Why would they take 120k cash now unless it's been sitting? And you can't buy it with your LLC to increase the value because it could be argued that it is not an arm's length transaction. If you want to buy a property for your kid, you should think about empowering her and involving her in the process as more than just a tenant. Give her an ownership stake and have her manage it as a quasi-landlord.