I want to use my current home and do a HELOC.  

If they can build a larger home and sell it for the same or more rather then building a couple small homes why do it?

., Purchase Price: $475,000 ($197.9/sq. ft.).Estimated Market Value: $402,000 ($168/sq. ft.).Financing Terms: 2% interest rate, with a 9-year balloon.Unit B Income: $2,049/month (Section 8 tenant through November 2025).Unit A Income Potential: Similar rent or higher; Section 8 cap for the area is $3,234/month.Monthly Loan Payment (P+I): $1,386.Cash Flow Breakdown (if both units are rented at $2,049/month):Gross Rent: $4,098/month.Vacancy (10%): $410/month.Operating Expenses (37.3%): $1,376/month.Net Cash Flow: $943/month.Key QuestionsWould you be comfortable paying an 18% premium for financing at 2%, especially in a market where current mortgage rates are closer to 7%?

And you know who sells SubTo insurance?

We’ve found a great option for us in Tennessee with a cabin (currently used as a str) and a mobile home.

Loan interest is deductible based on it's use-not the asset securing it. 

@Mike Levene do any of you own your homes currently?

Ask your lender about a bridge loan....

Don’t forget heloc, DSCR, 2nd on primary, borrow from retirement accounts, credit card cash advance, property reserves, home improvement store credit, etc etc.

@Chungying ChuIf you want more liability coverage, ask your insurance company if you can increase it.