Single Family Home VS. Income Property

[Paul Huerta]

My grandmother wants out of her 5 bedroom house in Chicago. She would like to sell to me. But I've been wanting to purchase a cash-flowing income property (multi-unit) for myself, my daughter, and fiancee. The home needs A LOT of work as is but has the potential for a huge increase in equity if completely redone. Huge basement that if finished has the space for additional bedrooms and bathroom(s). I was thinking that i could buy, rehab, reappraise, and then use the equity to get a HELOC to purchase the multi-unit. Is this the smart move in this market? I would still have FHA eligibility because she would keep her name on the mortgage I would just be taking over the payments (less than what I pay in rent now) and all she wants is the difference of the appraised value vs. what she still owes (65k).