Looking for Advice on Scaling Rental Portfolio – Large Equity & HELOC Available

[Ryan R.]

Hi everyone,

I wanted to share my current rental situation and get some advice on the best way to scale my portfolio. Here’s the breakdown:

Property Details:

      Location: Oxford, MS

• Purchased in 2020 as a primary residence via FHA with minimum down payment. Was built in 2005

• Purchase price: $120,000

• Original cash invested (downpayment, seller covered closing costs): ~$5,800

• Current appraised value: $320,000

• Remaining loan balance: $117,000

• Monthly mortgage, taxes, insurance + HOA: $961.41

• Current rent: $1,800/month

• Management: Property is self-managed.

• Updates/Renovations: We just replaced the roof. A/C and appliances are original as far as we can tell. I have replaced parts in the washer and dryer. Garbage disposal was recently replaced. I do most of the work myself, hesitant to upgrade appliances since I can still get parts for them to repair. 

Current Financials:

• Monthly cash flow: $838.59

• Annual cash flow: $10,063

• Cash-on-cash return (based on original investment): ~173%

• Current equity: $203,000

• Loan-to-value: 36.6%

• Current Rental Reserves (Just drew $5,000 out): $1,462.75

Personal Financials

• Current Residence: Her grandparents passed away and we were given the option to purchase the house. After running the numbers at the time, we did not feel comfortable with what the payments would be. Instead, we decided to rent the home from her parents with the option to buy out the mortgage at a later date if we wanted to. Currently paying $1600/mo for rent.
• Income: My wife and I gross around $100,000/yr combined
• Expenses: Our current DTI is around 43%
• Current Savings: ~$35,000

New Opportunity:
I’ve just been approved for a HELOC with a $100k limit. Interest-only payments at current rates (Prime Floating: ~7.5%). 

Goals / Questions:
We are looking to scale our rental portfolio, and I’m weighing different strategies:

1. Advice/Opingions on using HELOC to acquire another rental property while keeping cash flow positive.

2. Other leverage or creative strategies you’ve seen work for scaling from a property with high equity and low original cash investment.

3. Markets to invest in. Oxford is overpriced at this point compared to what rent rates are. We are looking at potentially moving to Orlando, FL towards the end of next year. We are fairly open minded about in-state/out-of-state investing.

Would love to hear your thoughts, strategies, or lessons learned on scaling with a HELOC and managing leverage while keeping cash flow healthy.

Thanks in advance!

[Melissa Justice]

@Ryan R.,

Hey, thanks for sharing all the details - you’re in a really strong position with that first property. Honestly, the way you structured it, plus the equity growth, gives you a ton of flexibility going forward. A few thoughts:

1. Using the HELOC
– A HELOC is a great tool, but just remember it’s floating interest - so you’ll want to deploy it into something that has immediate cash flow and strong fundamentals. That way the rental income comfortably covers the HELOC payment and then some.
– A lot of investors I know will use the HELOC for the down payment/closing costs on a conventional loan property instead of trying to buy outright with it. That way you’re leveraging the bank’s cheap money for 75–80% of the purchase and only tying up a smaller chunk of your HELOC.

2. Scaling Strategy
– Since Oxford is overheated, don't force another deal there. You’re right that the numbers don’t work. Instead, look at markets where your equity will stretch further.
– The simplest way to scale without creating a second “job” for yourself is with turnkey single-family rentals in the Midwest and Southeast. You can buy into fully rehabbed (often new-build) homes that are tenant ready and property management in place. That way your HELOC funds go straight into properties that are cash-flowing on Day 1.

3. Markets to Consider
– Birmingham & Huntsville, AL – strong job growth (US Space Command is coming), landlord-friendly, affordable SFRs.
– Memphis, TN – known for cash flow, especially with Section 8 and workforce housing.
– Cleveland / Akron / Canton, OH – affordable entry points, good price-to-rent ratios.
– Dallas, Houston and San Antonio suburbs – may not cash flow as well as the Midwest, but if you move there, you can house hack or keep eyes on STR/MTR opportunities.

4. Next Step Mindset
With your equity position + HELOC + cash savings, you’re in a place where you could realistically pick up 1–2 out-of-state properties over the next year while still holding reserves. That’ll set you up with stronger cash flow before you make the move to Orlando.

Always happy to chat more about what's worked for other investors. Best of luck!