Updated over 6 years ago on .
Need feedback on best way to finance a current deal
I had a seller I reached out to last year contact me last week. She wants to sell me her house by April. Problem is I wasn't looking to buy now. I spent about $80k to buy and fix up a rental property late last year. I figured to be ready for another purchase in the fourth quarter of the year. I want the purchase and have enough equity in my portfolio, I just need help in choosing the best strategy to use to purchase this house. Below is how my LLC is setup
Dallas LLC
Property 1- has $80k of equity and monthly negative cash flow of $18 ( I plan to raise rent or convert to Airbnb in a couple of months)
Property 2 - has $50K of equity and monthly cash flow of $845
Property 3 - is fully paid off (appraised at about $100k) and monthly cash flow of $1000 (I funded the cash purchase with a $40k cash advance from credit card with no interest for a year. I have until December to pay it off, current balance is $32K, I pay $3k per month from my combined monthly cash flow)
About house I want to purchase
Worth about $70K but needs some work. Based on my inspection report I will need to spend $10K to $15K to fix it up. If I make a cash offer I should be able to buy it for about $55K, It will rent for $1250 per month with $40 monthly HOA fee.
My current financial options
1) I don't have any cash on hand to do a cash purchase. If I do a 30 year finance with 20% down payment, I will need to buy it for around $65K to finance with my current lender. I still have to spend $10-$15k to fix it meaning I will intentionally over pay just to secure a finance.
2) See if I can get a HELOC on property 3. I am not sure how long this process takes or if it will work.
3) I plan to call the bank tomorrow to see if I can get a business line of credit or asset based line of credit using property 3. The LLC is less than one years old.
Are there other better options I should consider?