Hi Scott, consider USFR for zero risk cash, earns 5.4% holding 8 week Floating rate note US treasuriesor for mild risk cash, consider BKN - BlackRock's Muni fund, earns 5.6% tax free, which for you would be >9% tax-equivalent yield, and if rates fall, the BKN etf will rise considerably, which though will be capital gains taxable :(, It holds intermediate term Municipals that are all GO, general obligation, so they can always tax us dumb schmuck citizens to pay off the notes instead of defaulting, so low risk but not zero risk for cash. ie (Orange county '90s)Inflation has already resolved, the 3 month trailing core PCE is at 1.5%, well below FEDs 2% target, so they will likely start cutting soon as the 12 month trail falls in line, that's why Powell changed his verbiage so much last Wednesday, and FOMC minutes speak of 150 bp cuts before the end of December as their expectation per their Dot Plots, the only question remaining is consumer spending,(>60% US economy), if falling like McDonalds/Starbucks/Uber saying then unemployment will accelerate and then possible recession, then 10yr yield falls even more, and bonds values would rise like Mike just said above.

Also another consideration will be the 50% FEMA rule.

Focusing on the 5% down payment is an indication you place no consideration on downside whatsoever. 

In reality, most older homes will cost you considerably more in maintenance, capital expense, and vacancy (people just generally like to live in and rent newer homes).

Expect to spend a considerable amount of your time speaking to people.Expect to work dozens of hours/week with little to no immediate result.Expect most of your early interest from potential clients to come from your sphere of influence.Expect to go 3-6 months without getting paid (unless you do rentals which usually pay faster)Expect to be bombarded with distractions - mainly, people/companies marketing to you so that you choose their system for quick and easy buyer or seller leads.

Initially, tell him the considerations with the options and later ask him what he thinks of the options, then explain the considerations.

I'm actually in consideration of allowing an individual to conduct rental arbitrage with a rental of mine.

Since rates have gone down considerably, should I plan to refinance again as soon as next year? 

Their customer service department is very responsive.When selling a service as taking care of everything and handling the complete process, this includes all forms, liabilities and considerations for that particular need.

Can you ever use these funds as they accumulate to go purchase another property or does that trigger taxes?