Philadelphia Engineer venturing into REI, starting in low income.

[Matt N.]

Hello friends with bigger pockets,

I am looking for feedback on the next step in my investment strategy and was hoping you could help. I am a young engineer who wants to be safe or smart with my money. Not afraid of doing the work other than structural, electrical and major plumbing. Both positive and negative feedback are extremely valuable to me so please comment! 

Here goes. I saved saved saved and bought a 2nd home outright. This is in a low income area, cost was 28k + 4k to fix it, now I'm in it for 32k, comps are ~40k. Rent is already coming in strong at $750/month with tenants who want to stick around. 

Once rented I immediately applied for a HELOC on this property. I'm waiting on the line of credit and searching for rental property #2; in the 30k-40k range after repairs.

First question. Once #2 is up and rented. I could pay off the HELOC in 2 years but that would require me to allocate 100% of the cashflow from both houses. Is this a bad move? My thought is I then will have 2 places, take a bigger HELOC and grow.

2nd question. When do I protect myself with a LLC?

Finally, Please share wins and losses in low income areas. The cashflow is great! I think the hardest part about low income is finding good tenants. Can a cost be associated to that? Also, I'm aiming for big streets, or transportation hubs (subway station, train stops, etc). I think this is my best shot at keeping the cash flowing while having the best odds of appreciating. 

Thanks everyone!

-Matt