Using the HELOC strategy to buy rentals

[Alex Corral]

I am in the process of obtaining a HELOC on my primary, with plans to buy some rentals. I've been doing a lot of research on how to pay down the HELOC faster using it as a checking, and have some questions as things are getting a bit muddied.

I'm debating on buying 2-3 properties cash (HELOC money). I think this would allow me to make a more aggressive offer, and saves me about 3% in closing costs per property. I was planning on using all the cash flow from the rentals to pay down the HELOC faster. In addition, I plan to deposit extra income left over from my paycheck. At this rate, my plan is they should be paid in 6 years. At that point, I would start over. With 6 properties, the cash flow shouldbe more and those 3 properties paid in 3 years or so.

Pros: More aggressive cash offers, save on closing costs, pay down HELOC faster.

Cons: HELOC interest is no longer tax deductible, while a typical mortgage on the rentals would be. Will take me 3 years to buy more rentals paying cash.

My other dilemma is if I buy the rentals in an LLC, and use the cash flow to pay off the personal HELOC, what issues am I getting into? Should I even put them in an LLC?

I also wanted to invest in some private notes and use those profits to pay down the HELOC faster.

What all do I need to do?

TIA