STR Deal with a HELOC

[Ryan Elam]

Hi all, 

I would love some expert advice on an STR deal I'm analyzing.

This will be my 2nd STR property and I just qualified for a $90k HELOC (3.75%) on my first STR property.

Here are the details of the 2nd STR deal I'm analyzing: 

Purchase Price: $475k 
Loan: 10% down @ 4.125% 
Total investment (downpayment, closing costs, rehab, furnishings, etc): $150k 
Annual Expected Cashflow: $40k
Partner Equity/Cash Flow Split: 70% for me & 30% for investor (50/50 split on cash flow until investors investment is paid back in full) 

My investor will be bringing $65k to the deal which will cover downpayment + closing costs ($60k) and $5k additional for rehab expenses and I will be responsible for $90k (as well as setting up the property, and running the STR operations). 

I know that the overall year 1 CoC return at 27% is solid, but what I'm wondering is...

1. Does it make sense to use the HELOC to cover my portion of the investment? I have the cash, but would prefer to leverage the HELOC and save my cash for other opportunities. 

2. If I did use the HELOC, how would I calculate my CoC return? 

3. Does this seem like a good deal for me? 

Thank you so much in advance for any feedback and advice.