Unconventional investment strategy?

[Kenny Dofer]

Hello,

I live in a pretty hot market, with very low vacancy rates and high property demand. I was recently laid off from my job and have three issues: 1) No way to get a conventional mortgage 2) Need a place to live, and an advantage: sizeable savings on stock, bonds.

I want to start investing in RE (ideally multifamilys), but for now I want to start small: buy a condo to live in, and [whenever I buy a multifamily I could move to] rent it.

I would like to evaluate my high-level strategy, and get your comments:

* [Soon] Get a "securities line of credit" worth around 15% of my savings. Rate would be around 8.15%, but it's variable.

* [Soon] Buy a condo with that cash, live on it, and pay the loan interest (as if it was my rent), basically making this an interest-only loan, where I can pay the premium whenever I want, deducting the "rent" as I go. 

* [6-24 months] Whenever I find a job and qualify for a FHA multifamily, get that property (with break-even cashflow most likely), and rent the condo at a cashflow loss for a couple years until rent increases (due to high-interest on underlying debt)

* [Almost immediately afterwards] At this point, do a cash-out refinance on the condo to pay back the SBLOC (unsure if this is possible immediately after getting the multifamily loan), and secure a lower rate for the condo itself.

I know this strategy sounds like loser, as it bleeds money all around, but my hypothesis is:

* Underlying assets should grow more than 8.15% in a given year, and I would not pay short/long-term taxes on stock. So, it would not be a net loss, just a decrease on stock performance compared to leaving them alone.

* "Rent" could be tax deductible

* I get to secure a good property (condo) early, before prices increase (when rates lower)

* Eventually, both properties become positive cashflows, and I get to have two leveraged properties within 1-2 years.

Thanks!