Anyone experienced using a HELOC?

[Tim Rostro]

Happy Labor Day to everyone! So here's my situation and I'm looking for guidance. My very first property that I've bought, a single family home, is about to be paid off by early next year, April 2020. I'm working on property #5, a duplex in Pittsburgh, PA using my own funds, stocks, mutual funds, and some cash for a down payment. However, with that SFH being paid off, I want to use a HELOC to fund my next property and future properties. Doing my research on the internet concerning HELOC, I can get a loan of up to 80% of my property. This SFH is a starter home and it's worth almost $100,000, so, I'm looking at close to a $80,000 HELOC.

My concern is I'm taking a loan to purchase another loan (HELOC to fund a mortgage) and I still have to pay for both the HELOC and the mortgage for the new property(ies). Of course, I'm going to do my research and make sure the numbers add up to where the rental income from each property can pay for the mortgage and into the HELOC. Paying off the HELOC should be the number one priority which could take several years by which time, I'm not able to receive any income from those properties.

Is this fiscally sound? A loan for another loan? I'm taking a loan to fund another loan. I could go into my savings and investment and cash them out for the down payment and don't have to worry about a second loan (HELOC). However, used in the right hands and not mismanaged, a HELOC is another avenue or tool in which I could tap for capital for major purchases.

Anyone have any experience using a HELOC to purchase investment properties and did it work for you? Or is this something to be avoided?

Thanks.  

V/R, Tim Rostro