It is impossible to calculate what the inflation will be on the home I purchased and for this reason, I always try to build in equity on the purchase whether new or short sale.

If it could save, say, $3,000/yr in expense at 10-cap it would add $30,000 in equity to the property.

I now have about 20K in equity in this property and I'm now considering doing the same thing again, taking out a HELOC to buy another rental.

Good increase in equity , good cash flow, minimal vacancy factor and management requirements.

I have 2 rentals, one has 50K in equity and cashflows $450 mo.

Assuming a 10% cap rate, you'd be looking at 100k NOI, plus another mortgage payment on the new property of $4,600 mo, leaving you with a net of $5,400 a month.And now you'll have to complexes that will continue paying down mortgages and continuing to appreciate.Here's what you have today:1 property:Value: 1milNOI minus mortg payment (2k): 4k per monthPrincipal Paydown: 18k/yrAppreciation (assumes 2%): 20k/yrHere's what you could have if you pull out 360k in equity and can get a 10cap complex worth 1mil with 30% down (300k).2 properties:Value: 2 milBLD 1: NOI minus 2 mortg payments (2k + 2,300 equity loan): 2,500BLD 1: Principal Paydown (2 mortgs): 18k/yr + 10k/yr = 28k/yrBLD 1 Appreciation: 20k/yrBLD 2: NOI (100k) minus mortg payment on 700k loan (4,600) : 5,400.BLD2: Principal Paydown: 20k/yrBLD2: Appreciation: 20k/yrTOTAL Monthly income (both properties): 8k/moTotal principal paydown: 48k/yrTotal Appreciation: 40k/yrAgain, I'm not sure if 1mil complexes in texas can be had at 10cap.

By "creative" I am not planning on using conventional financing at all, and was thinking of creative ideas for having my stepfather finance the property in a way that still allows for cash flow for him, but gives me access to a small portion of the $275-300k in equity that home so that I can come up with a down payment on another investment property.

So if I understand your example correctly, you paid 40k, which allowed the owner to retain about 20k in equity.

Investing in Equity is like being part of the entire group that finds the deal (usually distressed property), stabilizes the property and then either sells it or held in the company's portfolio, managed and monthly returns distributed (after expenses are being paid for).

Ultimate Goal: 10 million in equities with annual passive income of ~ $ 500, 000 so that I can do academic medicineShort Term Goal: Buy a quadruplex within next two years