Financial structure for first investment property

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I’m looking at buying a first investment property in Oakland CA, at an anticipated cost of around $1.2M. I am looking at it as a buy and hold, renting out in the near term, and ultimately renovating and either moving in or selling for capital gain.

I currently own a home, with a 30-yr mortgage. I have equity of around $500k in it. The mortgage is in my name only (not my wife’s).

I have around $100K in cash available. I have additional investments I can liquidate for a down payment up to $300k though that would trigger capital gains tax (some short term).

What's the best way to structure a loan and purchase to minimize cost and tax liability? My wife currently has only a car loan in her name, and we have great credit. We do not currently have an LLC, but could set one up.

Thank you!

The first thing to think about here is that you will want to identify is what kind of property are you purchasing. If its a single family home vs small multifamily have different down payment requirements for nonowner occupied typically. I generally tell people to underwrite for 25% down unless your loan advisor tells you otherwise. So you will need around 300k (not including closing costs). 

The fact that you have so much equity in your primary residence is great. You might consider doing a HELOC on it to access some of that equity. I'm not sure of the rates but I bet it will be less than cap gains on your investments. The nice thing about a HELOC is you don't pay interest on it until you use it. In contrast, you could do a cash-out refi but you start paying the interest on the cash out on day one.

Another thing to consider is do you have any friends or family that have some cash sitting around? IF so, you might consider approaching them and offering a reasonable but fixed return on their cash if you secure it to the investment property. There are a ton of professionals around our area who have 100-500k sitting and they don't know what to do with it. 

I've done this with some people in my network to fund a flip and it worked out well. DM me and we can chat about it further. I hope some of this helps.