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HELOC plan

Hey guys! I’m looking for a reality check on a long-term plan my girlfriend and I have been working on. We live in Massachusetts, where the average single-family home is around $650K to $700K depending on the town.

We’re planning to buy our first home in that range with about $65K down (10%) and live in it. Our goal is to immediately finish the basement as a legal ADU (accessory dwelling unit) with a bathroom and kitchen, basically turning the house into a 2-unit setup.

The idea is that the ADU addition plus a kitchen/bath remodel would realistically add around 15% in appraised value, on top of the 2% annual appreciation we’re currently seeing in the area. Once the property hits roughly 20% total value gain, we’d pull equity out through a HELOC and use that as the 10% down payment for the next home, repeating the process every 3 years or so if the numbers work out.

The goal isn’t to flip houses but to go heavy into rentals, slowly increasing our portfolio each time using ADU rental income as well as equity in the homes.

Obviously risky as hell since defaulting on one loan can ruin everything we’ve worked for so far. We’ll be sure to keep 50k for anything unexpected.

So far, the math looks like this: • Base appreciation ~2% per year • ADU + remodel adds ~15% boost • Need about 20% total gain to pull HELOC for next property • Target: one new home roughly every 3 years

I’m curious what others think: • Does this sound realistic in today’s market? • What risks am I missing (HELOC rates, LTV limits, appraisals)? • Anyone in Massachusetts doing something similar? • Is 15% gain after ADU install realistic? Seems steep but some sources say up to 30% even.

Appreciate any feedback or sanity checks before we pull the trigger on the first property. If you want to check the numbers just dm me

submitted by /u/AnswerMyPrompts
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source https://www.reddit.com/r/RealEstate/comments/1oaowtr/heloc_plan/
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