Personally, I wouldn't use a heloc to then go purchase a primary residence, unless what you can rent the current SFH for enough to cover the current mortgage (assuming there is one on the property) and the heloc payments.

If so and the monthly payment isn't too bad then you're still moving the needle forward if your main goal is wealth generation and not just cash flow. 

It depends on what the terms of your mortgage are.Pros-with no mortgage, you have higher cash flow.Cons-if you plan on buying more properties, you are better off saving the money for a down payment for your next place.The big questions are: can you get higher than 7% return if you invest that money elsewhere? 

@Charles EvansFrom my experience, having rental income of $1,400 to offset a $2,600 mortgage, leaving you with a $1,200 payment, is a manageable setup with an income-to-mortgage ratio of 28.5%.

The down payment is 25% down for single family residences and 30% down for 2-4 units.

He wanted 1/3 payment up front in cash and I paid him.

I could put a down payment for a conventional (20-25%) 550k duplex, but I feel it could hurt my chances of buying as many duplexes in a 5 year period (for example) if I go conventional VS an FHA at 3.5%. 

Option 1 - NOI = Rent - (maintenance, vacancy, management, property tax, insurance)or Option 2NOI = Rent - (property tax, insurance)in both cases i assume DSCR = monthly payment/NOI

I agree with Erik, although their are some investors out there that will help fund the down payment/entry fees that you mention, they typically are friends and family that trust you and believe in you.

Find Brandon's videos on YouTube for the "four square" method of analyzing homes and practice.