1st Investment Property - 525k plus 150k in Rehab. Thoughts??

[Adam Gerber]

Hey guys,

I am new to the investment property world, and am currently investigating my first property in Portland, ME. I have identified a 3 unit, each 3 bed/1 bath. The listing price is 560k, but I believe I can get it for 515k. It will require 150k in rehab costs.

After expenses (mortgage, insurance, repairs, capex, taxes, city fees), I expect to make a minimum of $250 per unit, and build 7k in equity the first year, increasing year over year from there. 

The issue is, to make this deal happen, it would require 25% in + rehab costs, or around 295K stuck IN the property when complete. 

Does this deal make sense to anyone else? Assuming if purchased for 515k and 150k goes in, the property is worth 700k afterwords, what are the best options to recover my cash tied up in the property to work on project #2...? Refinancing leaves the mortgage payments a bit high and crushes cash flow. Would a HELOC be a reasonable alternative?

Thanks,
Adam