My realtor does quite many deals that has built-in equity, which is why I’d love to get some experienced perspectives on a capital-efficiency question.Some background and numbers:⁍ Target purchase price: <$200k SFH⁍ Strategy: long-term buy & hold⁍ I’m investing out of state and using a property manager⁍ My current savings rate allows me to comfortably buy ~1 property per year using traditional 20% down. 

-I am extremely skeptical that your realtor is offering you deals with "built-in equity."  

You've got 90K in equity, so you can probably pull 0-75K without destroying your primary property's cash flow.

Since we have been operators of the property for at least three years under the terms of the lease-option, some banks are willing to treat the option purchase like a refinance which allows us to use the equity to acquire the property requiring little or no money down and sometimes even cash out because of the increase in equity. 

Bringing in equity reduces leverage and gives you breathing room if costs increase or timelines prevent the repayment of the equity line.  

You’re earning about 4% on “your” $700k in equity.

Start by targeting properties with built-in equity in strong neighborhoods, keep rehab scopes manageable, and make sure your numbers work even with conservative projections.

After projected rent from the second unit and accounting for taxes, insurance, maintenance, and utilities (+ 20% downpayment), our estimated net housing cost would be around -$2,500 to -$2,800 per month.While this is affordable for us, it represents a meaningful increase in housing expense and would likely reduce our ability to invest aggressively in equities, which has been a core part of our wealth-building strategy.

No holding costs.I buy for 300k and we split the closing costs he makes 10k, I make 10k in equity.  

If everything goes as planned I would only cash flow like $75 but I would pull 140k in equity.