HELOC question

[John Jabson]

A few years ago I took out a HELOC on my primary house to buy a rental property. The rental property ended up not cash flowing very well because the line of credit took up too much of the monthly cost. The rent was 600, the PITI was about 290, but the HELOC ate up 190. So the property only cash flowed 100 dollars or so. In order to solve this problem I refinanced my primary and secondary (Heloc) on the primary. It raised the monthly cost for my primary slightly, but it solved the cash flow problem for the rental. I really believed this was a good move.

I am now buying a 3rd house as a primary. Thankfully we bought it for 75K but it appraised at 93K. I now have about 20K in equity in this property and I'm now considering doing the same thing again, taking out a HELOC to buy another rental. However, I cannot do this same cash flow problem again.

Is it possible to take out the HELOC for 10K, buy a 40K rental property (20% down) and then refinance the primary and secondary like I did before?

Just looking for any thoughts on this. Interest rates are low so if I'm going to do this, I might want to start looking to do this soon.