Rental property strategy advise

[Brodie J Meaux]

I have recently inherited a 3b 2bath single family dwelling appraised at $100,000. With no debt on the residence. Im planning on opening an LLC and renting it for one year to collect capital and an doing 75% home equity loan on it. I plan on using the $75-$70 k to purchase 6-7 $50k 2b 2bath single family dwellings using 20% down on each residence. That is the strategy I was planning on going with. Can anyone give me any advice on if that's a good plan or if they have any better ideas for growth in rental real estate. I work daily make 50k a year and am new to real estate.

[Joe Villeneuve]

Why invest in 20 problems when you can put all of that refi money into 2 or 3?  A 20% DP on 20 or 3 equals the same total PV, but less headaches, better tenants, and better cash flow with larger/fewer properties.

If you want to grow, you need to sell these properties when they appreciate to where the added equity is equal to the paid for equity (down payment).  This is when the properties are at their maximum value, and also when they start to decrease in value due to the ratio of equity to property value.  The value of a property is based on how much property value your equity is "buying", and as the PV grows, the equity grows the same amount, thus the ratio goes down, and the true value of that equity also goes down.  Why?  If sold, that equity can go back to a 20% of PV buying power.  Do the math, and you'll see what I mean.