HELOC/S8 Strategy - Am I Way Off?

[Andrew Martel]

Hi BP-

So I've been tossing this idea around for quite some time now and I'd like fo you guys to poke holes in it/educate me if I've missed something.  Here it goes.

I'm planning on going into section 8 as a method of passive income.  Here's my strategy.

1. Purchase property <45K cash. Plenty available where I am buying, plenty of demand.

2. Fix - Rent via S8.

3. In the location I am looking to purchase "Average" S8 rent is 1100/month

4. Here's where my plan may be flawed, but I've never tried this so please educate me. Take a HELOC out and use to pay cash for next S8 home ensuring payment is 1/2 of S8 rent coming in. From what I understand a HELOC is 70-80% of the appraised value, the home's I am looking at purchasing need work and appraise for 20-30K more than I'll pay. So that puts some additional cash in my pocket.

5. Repeat. Is there a limit to how many HELOCs I can have? What if i paid cash for the home and placed the home under an LLC? Is it harder to get a HELOC if the home is under an LLC?

So what do you think from a 30,000 foot view.  Would it work?   Thanks guys. You rock!