HELOCs for down payments—the perpetual stall?

[Doug Fluckiger]

Newbie investor here. It dawned on me that if I pull out a HELOC to make a down payment on a rental property, and then finance the rest of the property, there will be no actual cash flow, at least for a number of years. :(

Here's what I mean. Say I purchase a duplex for $250k with a down payment of 25% since it's a multi-family ($62,500). Rentals cover the mortgage, property maintenance, and property management. But the down payment comes from the HELOC, and the property cashflows at $250/month. That means my cashflow is not going to me at all but to the HELOC, and it's insufficient for that—it would take 250 months, or almost 21 years!

I wondered if a fix-and-flip is a better option in my case, where I can use proceeds from the sale as seed money to pay off the HELOC, rinse, and repeat; but I can see how that would get into an endless pattern. I'm sure I'm missing something big as other investors don't seem to have this problem. What am I missing?