Using a personal loan to purchase a rental?

[Anthony Webster]

Hey all,

I have a 3/3 townhouse that I bought at the beginning of this year. I lived there and rented out the two spare rooms until August when I purchased my current 3/2 home with a 1/1 guest house. I rented out the last room in the townhouse and am renting the guest house and master in the current home.

Right now I’m making about $1k a month in cashflow after all expenses including utilities. I’m considering taking out a $50k personal loan to get another rental now, renovate it, and then take out a home equity loan on it to pay off the personal loan after purchase and possibly even get enough cash out to put down payment on another rental. I would probably make an additional $600-800 a month in cashflow if it worked out.

Experienced investors, what are your thoughts on this? Would I run into any potential issues getting a home equity loan to pay the personal loan?