Beginning Strategy
Hello all,
About a year ago, I purchased a home in Arizona that has seen phenomenal appreciation rates. I qualify for a $100k HELOC from my lender, which I'd like to use to pay off my second ($50k) and invest the other $50k in RE (primarily single family rental units).
Are there any problems I'm missing with using the HELOC to purchase say, 3 homes with 5% down (comes to around $10k each including closing costs) and leave the other $20k available credit as a reserve (repairs, maintenance, etc).
The reason I ask is because I want to get a few homes around here, but I don't have much operating capital at this point. I have enough to pay my mortgage, car payments, bills, and still have some fun, but I'd REALLY like to get into these rentals and am wondering if leaning totally on the HELOC for all of the money I might need is a good idea.
Obviously this is just to get me started. I plan on holding these few for 5-7 years and then selling. Within 5-7 years, this area will have the freeways, malls, commercial, etc. to make it a very attractive housing market. Once I sell, I'll have the cash to pay off the HELOC and then I'll be okay.
Anyone want to play Devil's Advocate? 
Thanks,
Scott
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