What financing option would be best for first investment rental?

[Jason Hudson]

I'm interested in buying my first investment rental property. Looking at small multi-family properties. I'm wondering what would be my best route for financing on my first property. Should I go with a HELOC, Cash Out Refi, Conventional, or some other option out there?

[Charles Situ]

If it is 4 units or less, most likely conventional. So you have no investment properties you own currently. To do the HELOC or cash-out refi, do you own a primary residence? And if you do, does it have enough equity? Some lenders would let HELOCs go up to 85% loan-to-value. But mostly likely its 80% for HELOC and Cash out refi. And even if you did that, would the proceeds you pull out be enough for the whole purchase of this new investment? If not, then it may be just to fund your down payment. Conventional investment would require 25% down. But you may be able to get FHA with 3.5% or less if the home meets certain conditions. Speak to a lender or mortgage broker and double check your debt-to-income ratios to make sure you qualify.