When using a HELO do you count it when calculating Cash on Cash

[Mike Barone]

I am looking at purchasing a duplex with a HELOC. When calculating cash on cash return would you use the whole amount or 0 cash invested since its a loan technically?

Here is the scenario:

Option 1

Purchase 140K paid cash with 150K HELOC (closing cost ect)
100% financed with HELOC = 13.2% COC Return / 50$ per month Cash Flow (rent can be increased by 200$)

I included all expenses 5% cap ex, 5% maintenance, 8% property management, 5% vacancy, taxes, and insurance

Option 2:

Put 20% down from HELOC and get conventional financing. 50 cash flow / 7.3% COC Return (All other numbers the same as above)

Is this a deal and which option would be better? Hope this makes sense.... Thanks in advance for the input