Start by running the numbers through a comprehensive rental analysis calculator (the one on BP is great), and get a picture of what your real cash flow picture looks like after you account for *all* expenses.I don't know what market rent is in your area, but if you have one or both units at below market value, you should definitely find a way to increase them.But, my gut says this property is still going to struggle to cash flow.

My ultimate goal is to buy and hold rental units and continue to increase my portfolio over time resulting in an impressive real estate empire i can pass down to my children.

In most cases, you can increase rent slightly, and get it rented while the previous tenant is still footing the bills.

Duplexes can be build for around $85-100/ft2, assuming middle grade finishes, this does not include land or soft costs.  3-4 unit building would be a decent amount more on a $/ft2 basis due to the use of different code and the increased fire & safety systems. 

He keeps his income stream without having to manage the property anymore, you get the property and can upgrade it.If you can successfully upgrade one unit and the exterior and show the increased rent follows, it might be easier to get an investor to help with the others.

Try looking at the surrounding areas which will not increase your commute as much. you should be able to buy a 2 family if you go out a little.

There are some HOA's out there that will only allow a certain percentage of units to be rented out and may have some other restrictions in the CC&R's.As for your question, the "best" way of doing something in real estate is typically subjective, but having a HELOC payment, in addition to the mortgage, taxes, insurance, and HOA dues, just increases the chances of having a less profitable property or one that may not cash flow at all.

I've wondered, during a downturn, when fewer people can no longer afford to buy, if demand for rental homes increases leading to raising rents.

Jobs in the msa is increasing too.

Is it better to use quality products or take the cheapest option to increase margins?