Hybrid Real Estate / Investing Idea
2) Get HELOC
3) Draw from HELOC as rent payments go towards equity in home
4) Invest HELOC draw into stock market
4a) could use dividends to create cash flow to live off of, or growth stocks to drive asset appreciation
Or you could use renter's equity to buy more rental properties, giving you more cash flow to invest.
It's basically the Smith Maneuver, but using rental properties (and other people building you home equity) instead of just using your own home.
It would probably be highly tax efficient, and it's an easy way to get access to cheap leverage as well as permanent capital backed by your HELOC. It would all fall down if you had a cash flow crunch and couldn't service your debt however (i.e. economy implodes, job losses mount, renters leave, forced equity / real estate seller at the bottom).
Thoughts? Am I crazy?