Looking to get into RE investing. Critique my plan.

[Mark W.]

Hi everyone, I have been lurking for a while I think it's time to start posting. I hope to eventually have enough knowledge to contribute, but for a while I will be leeching.

My Plan:
I am looking to pick up my first SFH in a few months in cash. I am looking at foreclosures, my plan will be to rehab and rent it out. I am looking to pick my first one up in the $20k-$25k range. My first question is, do you guys have any luck getting a HELOC on a property such as this? Say the property is worth $65k. My goal would be to use the HELOC to cover some rehab costs and purchase a second rental by the end of the year. If this isn't an option, what would be other options I should consider?

My long term goal is to start to build a portfolio of rentals that would eventually eclipse my current income. I am very new to real estate, I do have an out of state mentor, but no local guidance as of yet. I have been watching the local markets for about 8 months now trying to get a feel for different areas.

I am pretty handy and I plan on doing much of the work myself. I spent 4 years working construction in my earlier years and I have rehabbed the current house that we own. Any tips or reading that you guys can suggest would be great.

Thanks in advance,

Mark

[Jon Holdman]

Getting a HELOC on a fresh rental is going to be tough. You may be able to do a cash out refi based on the new appraisal if you wait for a year. Assume a very conservative appraisal and about a 70-75% LTV. If you save the details and take pictures during the rehab, you may be able to justify the higher value. If you buy it for $20-25K and do nothing, it not worth $65K. Its worth... $20-25K.

Hopfully you're not paying much (or anything) for that out of state mentor. The rental property business isn't particularly complicated. You can learn a lot just reading here. And the properties and tenants will continue to educate you no matter what you've already learned.