If your goal is to have a cash flowing portfolio of rentals. 

And again, with a separate parcel it should be easier to finance the construction and do a cash out refi. 

I saw your reply on the 2M cali home purchase with a gross rev of 150K. 2M @ 100% financing - the investor putting up that cash would need a note payment of 15K-20K a month to make that worthwhile. 

.🔹 Profit Multiple Ways – You can rent the property for cash flow, sell the option at a profit, or buy it later at a pre-agreed price (often below market value).🔹 Great for Sellers & Investors – Motivated sellers can turn a vacant or hard-to-sell property into income while investors secure future deals without a huge upfront commitment.🔹 Ideal in Any Market – Whether home prices are rising or falling, lease options allow you to lock in today’s price while benefiting from future appreciation.Other creative strategies—like seller financing, subject-to deals, and the BRRRR method—can also open doors, but lease options remain one of the most powerful, low-risk, minimal cash out-of-pocket ways to build a portfolio.

It is imperative to have a cash reserve for unforeseen circumstances, such as unanticipated maintenance or fluctuations in the market.

Jillian,You can solve two problems with just using a DSCR program to refinance pull cash out and then close in an LLC. 

Purchase price: $325,000 Cash invested: $50,000 This time I acquired a property that needed little to no work.

Quote from @Dylan Webb: Hello, here's my situation:My wife and I own several properties separately.2 of the single family homes combined we have conservatively $150,000 in equity ($90,000, $60,000) I want to use one of these as collateral for a small loan of $30,000 to put down on a high cash flowing property OR have a lender finance the whole venture at a purchase price of $160,000.

I paid an estimate of about 25k for each in cash.

Now granted if your experienced and paying cash and know your market.. that's one thing.. but the answer to the original question is   IT DEPENDS  LOL..