Is This Strategy Right?

[Chris LumLee]

Hi,

It took me awhile to figure this out and at that I'm still not sure if this is the "right" way to purchase additional rental properties.

I have a rental property in Detroit, MI worth just over $31K as of this writing. What I'm thinking is:

(1) take out a HELOC as a down payment in another location, which depending on the second location would be enough;
(2) Let the HELOC amount sit in my bank account for a couple of months- a lender I've been talking to said to do that because the lender will require two prior bank statements and a large sum of money like that they'll want an explanation for;
(3) Get a 30-year mortgage using the funds from the HELOC;
(4) Pay down/off the HELOC;

And then from there either keep chipping away at the balance of the mortgage or take the equity from that after awhile and repeat for a third property.

Is that kind of how this process usually goes? Any insight would be helpful!

Thanks!