Structuring The First Deal(s)

[Alec Tenzorio]

Hey folks, I am currently brainstorming how I plan to step into the world of real estate. I come here seeking your thoughts and constructive criticism of my proposed method which i'll explain. Basically my deal structure goes as follows. I plan on using a HELOC to put 20% down on a townhome/condo. I would live in it for the first year in order to qualify it as a primary residence, as I dont have a primary residence yet. I would live in the home for a year, and do this mainly to reap the tax benefits. Also I would be able to sublease a room to a roommate to take less of a hit on the P&I. I would then put money down on a separate rental property, and would expect to turn positive monthly cash flow in order to have two properties building equity, with the positive cash flow going towards the expenses on the primary residence P&I. (I know, this is long but I am almost finished). After this, I would continue to build equity, and then roll one, or both, into a 1031 exchange, refinancing for the new property, and ultimately pay off the loans/heloc with the newly acquired property loan. Has anyone used this strategy when starting out, and even if not, do you guys have any thoughts on this structuring? This is to hopefully occur over a maximum 2 year horizon. If you have read this entirely, I thank you!