Leverage, FICO, income vs no income, more documentation vs less documentation, appraised value, duration of loan, etc. are all risk factors that banks consider when making the decision to issue a mortgage. 

Value is also a key factor. 

Here are a few thoughts based on your goals:HELOCPros:* Flexible funding you can draw from as needed* Interest-only payments during draw period* Typically lower rates than hard money* You retain full control (no partner splits)Considerations:* It adds debt secured by your primary residence* Rates are variable and can rise* Make sure the rental income will comfortably cover your existing mortgage + HELOC paymentsIf your credit is solid and you have enough equity, this is usually the least risky, most cost-effective option for a new STR.Hard Money LoanPros:* Fast access to capital* Can help you compete with cash offers* Often used for flips or BRRRsConsiderations:* High interest rates and fees* Short-term repayment (usually 6–12 months)* You’ll need a clear and quick exit planThis can work, but it’s higher risk.PartnershipsPros:* Share risk and capital* Bring in someone with skills or market access you lack* Can accelerate your growthConsiderations:* Requires legal structure and strong communication* Profit splits reduce your long-term returns* Can be messy without clear roles and alignmentPartnerships can be powerful if you find the right person.

Cap rate for a specific property takes into account quite a bit of factors- Location- Traffic- Asset Class- Tenant Quality- Building Quality- Asset potential

The pros as I see it are - seller and assignee does not see your assignment fee in the closing statement, assignee doesn't meet your sellers, and no chance of being accused of being an unlicensed real estate agent when you are closing on your own deals. 

If you do decide to go that route, make sure you're underwriting the deal with the HELOC interest and repayment terms factored in, and build in extra margin for delays or cost overruns.There’s no one-size-fits-all answer, but my advice would be to treat your first deal like a training ground.

Second, the fact that the negative equity may not be the reason for a default doesn't mean there won't be other factors that lead to a default.

Quote from @Tricia O'Brien: I would say that 605 credit score is a huge factor.

Then you factor in the cost of the MLS, maintaining your license, E & O insurance, etc.

📊 Here’s What It Calculates for Me Automatically:Monthly Cash Flow (based on rent, expenses, financing, etc.)Cash-on-Cash ReturnEstimated Total Annual Return (cash flow + loan paydown + appreciation)Plus, I included assumption fields for insurance, maintenance, interest rates, and more — because if you’re not factoring in the less obvious costs, you’re fooling yourself.💡 Real-World ExampleHere’s a Twin Cities, MN deal I analyzed this morning in about 5 minutes:Purchase Price: $359,900Estimated Total Rent: $4,000/monthExpenses: $1,637/month (with PM and reserves)Debt with PITI: ~$2,624Initial Investment with 25% Down and Closing Costs: ~$100,772→ Cash Flow: ~$176/month→ CoC Return: ~2.09% Now this isn't the best deal out there, but I wanted to demonstrate how quickly and easily I was able to determine it was a dud and move on.