Turn Key Rental Properties - Advice/Reccomendations

[Thomas Giacinto]

Hello All-

I am new to Bigger Pockets and new to Real Estate investing as well. I am looking to get started with my first investment property in the next 60-90 days. I am looking for some advice on a few points and would really appreciate any feedback:

1. My strategy is to buy and hold turn key rental properties out of state. Does anyone have any recommendations or advice for a first time investor? I have been looking at Norada Real Estate and Real Wealth Network as resources to get started. 
2. Second, I own my home in Southern California and am in the process of getting a HELOC. My plan is to use funds from that HELOC to finance the down payment portion of properties I purchase. This will reduce my positive cash flow, as I would be using positive cash flow to repay the HELOC and Mortgage + Expenses. Does anyone have any advice for, or against using a HELOC to fund down payments?
3. My strategy is not focused on large positive cash flow in the first 5 years, instead my strategy is to use 15 year mortgages to build equity in these homes faster, and then to leverage that equity to acquire more properties. Is this a common strategy among turn key real estate investors? Is there a downside to this strategy?

Thank you to everyone who reads and offers some advice on this topic.

[Marco Santarelli]

Hello @Thomas Giacinto -- Welcome to BiggerPockets! 

Looks like you're my neighbor across the 5 freeway.  :)

As far as advice for a first time investor, I could spend four hours giving you tons of it. First and foremost I would suggest that you be clear on what you're trying to achieve, and how you want to get there. Make sure you drive your decisions with a clear strategy and criteria.

Second, using a HELOC is fine but it wouldn't be the best way to go about it. If you have liquid cash to invest that would be the number one choice. Using your HELOC is a variation of "Equity stripping" and works just fine as long as you understand the pros and cons. Sounds like you probably do. It's essentially a form of arbitrage.

Third, there are pros and cons to using a 15-year mortgage strategy.   Yes, you will have more equity in those properties in about half the time however your cash flow will be close to breakeven in most markets today.

Leveraging the equity from those properties in the future is common practice for some. It's a good strategy under the right circumstances. This is a subject on its own which could be its own thread or a private conversation.

Happy to grab a Starbucks coffee with you one day.

Continued success!