There is a distinct difference in the law between short term and long term rentals. 

Reason is a Heloc generally carries a higher rate on a shorter term and "Can Never" be used as an "Asset, or for PITI reserves" which are both required when you buy an investment property. 

The combination of generating extra green cash with a biz and then investing in real estate for long term weath is the way to do it.

@Joshua MiddletonI am very familiar with that street, good friend used to rent Long term on it for about 7 years.  

Glad you made your way here.. are you eyeing long-term rentals or short-term flips?

The only investments I’d do there is in short-term rentals in either Rome, Venice or Florence.

It seems like location would be especially critical with pad-split (and similar systems), but I’d love to hear your thoughts on what to watch out for in terms of zoning, safety, or demand.Also, I’ve traditionally rented out units the regular way, so I’m curious how screening tenants works for you with the pad-split (and similar) model.

Liquidity is important if this is money you plan to put to work in the near term. 

@Jordyn Ohsnot enough info to helpbut if you're using a HELOC for the down payment AND getting a loan, then you're probably negative cash flow given that's 100% leveragei would never do that unless i were going to refinance in the short term

While there's no strict requirement to match the original mortgage terms, reinvesting the full proceeds without financing or using leverage to enhance returns is key.If you don't reinvest the full amount, any shortfall ("boot") will be subject to capital gains tax, and depreciation recapture may apply.This post does not create a CPA-Client relationship.