Heloc or refi to buy a rental?

[Christopher Silich]

I have $135k in equity in my primary residence. I recently saw a SFR 3/2 deal at $99k cash, $10-15k rehab, $134k ARV, $1095/mo rent. Just an ok deal. But it got me thinking about my ability to do a refi or a heloc to get the cash needed to buy a house like this. In the example above, the equity in my primary would be enough to buy the house with cash.After rehab and after getting an 80% mortgage on the new house, I'd end up with almost all the cash back out, and could pay off the heloc or pay the mortgage back down to its prior level right away. On a better deal, I could even end up with extra cash. Is there something I'm missing that makes this a bad idea?

[Hiron Fernando]

@Christopher Silich yes, I just look for stronger returns in terms of the rent to price ratio. If your cost basis is $115k (all in cost) and rents are $1095, that puts you at 0.95% rent to price ratio. All my properties are at 1.3% or higher, that's where I start to turn a profit. However, depends on many factors, run your numbers and check. These are just "rules of thumb."