What is the minimum acceptable cash flow for 100% financing?

[Mal Toto]

Dear All,

I'm considering purchasing a property using an interest only HELOC + Conventional loan. It is a 3-family, which after expenses should produce about $360/month (see cost analysis attached). Rents are currently low for the market, but tenants have been there for a long time rent raises would have to be slow and tied to updates. Does the attached cost analysis look sound? Would you consider this deal? I've been negotiating for awhile and the price is not going to lower any further.

Thank you for any advice!

-Mal

[Russell Brazil]

Originally posted by @Jay Hinrichs:

@Russell Brazil  its really crazy this herd mentality to have zero money into a rental. 

and especially using a heloc on your personal resi.. that to me is really really risky.

what happens when the heloc is frozen or called.. this happens.. what then.

I can see heloc for short term in and out deals.

but rentals with all the risk and long term depreciation factors that are recaptured if you need to sell and exit.. 

Now I get the BRRR were you have equity cushion and 100% leverage I get that one.

but boy I certainly would never recommend anyone tag their equity which is tax free if you ever sell in your personal home.  

The issue I have with this BRRR strategy, is I dont think people consider the tax consequences if they have to sell. As someone who sells other peoples investment properties, I see people all the time getting ready to sell, and then they have the tax issue. They have increased the value of the property, so they have this huge capital gain that they dont realize they have to pay taxes on, and theyve taken all this money out of the property, and their tax liability outweighs what they can walk away with. Id say a few times per year Im sitting down with someone, doing the math, and they think they are going to walk away with $50k or something, and Im explaining to them they are going to have a $75k tax bill because of the gain and deprecation recapture, because they did these cash out refinances previously.