HELOC to pay all cash on a rental?

[Darrell B.]

Hi BP,

Im trying to figure out if I should look into using a HELOC on my parents home to buy a rental property in cash. I have out of state properties myself but this would be for them in retirement. They probably have over 600k in equity in their property. What are the numbers on if I use $200k and purchase a duplex cash that would rent for $2,000 month(1% rule)? Would the rents cover the principle and interest of the HELOC? What are the downsides of this? How long would it take to pay off? Can I just have the rents pay it all back and redo the same strategy over and over? The goal is to have paid off properties to pay my parents extra income in retirement.

Thanks