HELOC Hypotheticals - What're the downsides?

[Robert Blazer IV]

I'll start by saying it is my understanding that when buying property in the $20k-60k range, I'll be bidding against cash-buyers. Let's say I find a $50k property I like and I pay cash, then take out a HELOC. Then I find another house for around the same price - let's say $40k. I proceed to use the money from my HELOC to purchase the 2nd home for $40k. I proceed to take out another HELOC to fund my next purchase, perhaps a $25k home. Is this an inadvisable way to get my foot in the door? What if I use the cash from my 2nd HELOC to pay off my first, so now I have about $40k outstanding and 2 rental properties. I'm just trying to learn everything I can about this strategy, so any input is greatly appreciated.