., Purchase Price: $475,000 ($197.9/sq. ft.).Estimated Market Value: $402,000 ($168/sq. ft.).Financing Terms: 2% interest rate, with a 9-year balloon.Unit B Income: $2,049/month (Section 8 tenant through November 2025).Unit A Income Potential: Similar rent or higher; Section 8 cap for the area is $3,234/month.Monthly Loan Payment (P+I): $1,386.Cash Flow Breakdown (if both units are rented at $2,049/month):Gross Rent: $4,098/month.Vacancy (10%): $410/month.Operating Expenses (37.3%): $1,376/month.Net Cash Flow: $943/month.Key QuestionsWould you be comfortable paying an 18% premium for financing at 2%, especially in a market where current mortgage rates are closer to 7%?

My question would be is a 6 cap the going rate in the area for that building.

Reason is a Heloc generally carries a higher rate on a shorter term and "Can Never" be used as an "Asset, or for PITI reserves" which are both required when you buy an investment property. 

@Stephen Fleming your cashflow probably won't be what you think it will be:(Have you factored in the new property taxes at homestead millage rates?

Understanding the interest rate, loan maturity date, and any prepayment penalties will help gauge urgency.3.

What about rate and term refinancing?

The interest rate is not special nor is the 20% down (80% LTV).  

As-is cap rate of 7.5% in my market (kc) would be pretty awesome to buy. 

Fellow attorneys rate him 1.5 or 2.5 out of 5.  

You would end up saving the higher interest rate on the HELOC as well as closing costs.