We don’t use the 70% rule for anything except to decide if we’re going to look at the deal… and even then we just want to see if it’s close before we spend time running numbers.

Yes this method only works if #1 You make more money than you spend#2  You are willing to spend less than you make.#3  it works because people don't have discipline to pay their mortgage beyond the minimum.  

@Luis Cerwin as others have stated, Nov - Jan is the worst time of year to have a vacancy.Majority of tenants live paycheck-to-paycheck, so all their income goes to Holiday spending starting with Halloween, then Thanksgiving, then xmas, then NYE.January is also historically the worst month for rent payments due to Holiday Hangover Spending.

@Patrick Braswell Got it. just didn't want you to spend all the time working with your family members if the bank won't approve a HEL.

who used this his entire life and build a net worth of over $1 billion by the 1980s starting with absolutely no capital!  

Your strategy takes advantage of your employment cash flow and ability to control discretionary spending.  

You indeed have to spend that much money.

For REP status federally, you must meet two requirements: work 750+ hours in real estate activities and spend more than 50% of your total working hours on these activities during the tax year.

I'd say start the process of securing your HELOC if you havn't done so and spend time analyzing deals and determining what type of investor you are looking to be. 

I'm going off the understanding that you still need to spend 500+ hours in the business to achieve material participation (please correct me if I'm wrong).