Advice on First Purchase please

[Robert Harlacher]

Hi BP Community,

I would like to get some advice/opinions on my first purchase. Little background first, two years ago I made the decision that I wanted to get into REI obtaining buy and hold properties. With little funds to start with, I applied for a CHFA Loan and was approved so I began my search for a multi-family house where I could "house hack" for a few years to build up equity on the house which I would than tap into to buy another property, refi to pay back the equity, and repeat. The problem is my area has been very dry for multi-families for the past couple of years for properties in my price range or that fits my criteria.

Fast forward to today and situation hasn't changed much.  However,  I've been dealt a possible opportunity that I wanted to get the advice on.  So my parents are in a situation where they are thinking about selling their house to downsize and use some of the profit from the sale to pay off some credit card debt.  

From reading through the forums on here, specifically the 'Creating Financing', forum, I came up with an idea on how I could get my foot in the door of REI but not sure if it's a smart move or the right move to make being my first purchase. Their house is currently valued at around $300,000 and they owe $140,000 on it. My suggestion is to purchase the house for $200,000 which would give them money to pay off their credit debt and would leave me with $100,000 in equity.

I'm thinking I could take a heloc on the house in a year or two and use that as a downpayment on another property, fix it up, refi to pay back the heloc and repeat. The only thing that has me a bit hesitant is that when I run the numbers on the BP calculator, I'm left with a 4% on the cash on cash ROI, .88 % on the 2 $ rule, and a hundred and change in cash flow. So I'm essentially buying the house with no return but hoping to use it as access to the equity for future purchases.

Does something like this make sense or would even be smart to do for a first purchase?  Appreciate your thoughts on this.