I have renovated 12 houses in my life and just finished renovating a 1939 bungalow in the Oakland Hills and building an ADU on the same property out of the garage.Anyone who answers the presented question with solely a "yes" or a "no" without first referencing their local city's or jurisdiction's building code would be guessing.

I would be cautious chasing the 1% rule, a lot of the time it puts you into less desirable neighborhoods or into properties that haven't been completely renovated.

Capitalize renovation costs to increase the property’s basis and reduce future taxable gains.

Washington D.C. is fully embracing this trend, partnering with Monumental Sports to conduct a $800 million renovation of the Capital One area, which is home to the Washington Capitals, Washington Wizards, and other large entertainment events (Source).

The latest red flag is his belief he purchased a "fully renovated" property in Philadelphia for $115K.

Long term its not a great cash flow property but with some renovations and addition of a parking slab I think long term appreciation is the big goal here.

@Mario Morales - As some others have said I think the strategy is sound, but the key would be to find a distressed property that you can drive up the value with renovations so that the new value is 25% higher than the purchase price so you pay back your HELOC.

@Rosette PooleRecommend you first figure out the property Class you want to invest in, THEN figure out the corresponding location to invest in.Property Class will typically dictate the Class of tenant you get, which greatly IMPACTS rental income stability and property maintenance/damage by tenants.If you apply Class A assumptions to a Class B or C purchase, your expectations won’t be met and it may be a financial disaster.If you buy/renovate a property in Class D area to Class A standards, what quality of tenant will you get?

With your renovation background, you're well-positioned to excel in house flipping.

Instead of losing 55k they will probably only end up losing $25,000 - $30,000Long term its not a great cash flow property but with some renovations and addition of a parking slab I think long term appreciation is the big goal here.