Explain how cash-out financing or HELOC will help me grow.

[Aaron K.]

Let's say I own $1M in real estate, 100% equity (I don't, but round numbers are easier). I want to either HELOC or cash-out finance in order to purchase more rental property. Can you just read my line of thinking below, and tell me if this is how it works, or if I'm completely missing the strategy?

So - if I borrow 75% of my equity ($750k) at 6%, and subsequently buy a 10 cap property (10% return on a cash purchase, about average for my area) for $750k, that will net me a 4% overall return on that new property, or roughly $30,000 annually.

I've already taken into account taxes, vacancy, repairs, management, etc. in the 10-cap figure, so the 4% return after the loan is a true 4%.  Am I on the right track with this thinking?