HELOC/S8 Strategy - Am I Way Off?
Hi BP-
So I've been tossing this idea around for quite some time now and I'd like fo you guys to poke holes in it/educate me if I've missed something. Here it goes.
I'm planning on going into section 8 as a method of passive income. Here's my strategy.
1. Purchase property <45K cash. Plenty available where I am buying, plenty of demand.
2. Fix - Rent via S8.
3. In the location I am looking to purchase "Average" S8 rent is 1100/month
4. Here's where my plan may be flawed, but I've never tried this so please educate me. Take a HELOC out and use to pay cash for next S8 home ensuring payment is 1/2 of S8 rent coming in. From what I understand a HELOC is 70-80% of the appraised value, the home's I am looking at purchasing need work and appraise for 20-30K more than I'll pay. So that puts some additional cash in my pocket.
5. Repeat. Is there a limit to how many HELOCs I can have? What if i paid cash for the home and placed the home under an LLC? Is it harder to get a HELOC if the home is under an LLC?
So what do you think from a 30,000 foot view. Would it work? Thanks guys. You rock!