Best method to leverage paid off SFR to buy multi unit
Noob here... I am working towards my first flip... in education mode now... second angle I am working is... My family (mom) owns a small bungalow... worth, call it $250k to sell cash tomorrow no days on market, no rehab. She inherited it. Low Property taxes... good rental history due to location, we have had a PM on it.
rents after expenses are probably 750 a month net. I am trying to convince her, we should leverage that house and its equity and buy a multi unit. A triplex or maybe a bit larger, somewhere in the 500-600k range max.
Mom is unwilling to do anything that would risk her cash flow. She is in retirement. We are coming up on a vacancy now, likely have to do some deferred maintenance.... so now would be a great time to get a financing instrument moving, as she has little cash to do work on it.
I know how to look at a single rental and gauge its cash flow vs PITI and expenses... But I am a bit lost as to how to explain that with a loan on one, and buying another, we can get more cash flow in.. She will also push me on vacancy risk leading to peril for both properties I am sure... Every property will cash flow if I throw 100K at it... that isnt really an issue... I just need to be able to show her that we can grow, expand and make more!
Can any of you give me some guidance on ways to look at this proposal and the #'s...?
Secondly... a HELOC on the paid off house the best/easiest way to finance a down on the new place? Or just a cash out refi or...?