Purchasing First Rental Property With Cash: Then taking Money out with HELOC

[Curtis C.]

I am looking to acquire my first rental property. I often read how people leverage their money with hard money or private money. I am very conservative, and like to keep my debt ratio as low as possible, and as such tend to shy away from hard money loan products.

What I was considering, is perhaps buying my first rental property with cash money, and then leveraging my money with a HELOC. And keep the cycle continuing, effectively growing my initial pile of money.

I only pick up properties that need work, even if its just a light cosmetic job or a hoarder house and everything is otherwise structurally sound. Once I buy the property, rehab it, and have a tenant in place I will pull a HELOC out to acquire my next property. That way im leveraging my money, with a cheap 4% interest rate. I work with some investors here in DFW that can acquire houses at 55-65% arv minus repairs. So im effectivly using cash to buy a property at say 65,000 and its worth 100,000. I just traded 65k for 100k, and then im going to pull a heloc out on that 100k. I just created 35k in equity plus cash from the tenant and have a heloc at a cheap rate to pick up another one.

Does this sound like a good approach? Thank you very much for your help everyone, I really have learned alot during my short time here.