Hello, I am closing on my first property this week. It is a single family home that will be used as my primary residence. I was fortunate to be able to get a good deal on this property, in which I will immediately have a fair bit of equity built up. Because of this, I was also approved for a HELOC of up to 50k. In my general area, there are a number of REO properties that can be purchased for under 50k and the market is very much a sellers market. Homes in this area can easily sell between 150-225k depending on condition, and tend to only sit on the market for a matter of days. It is therefore very tempting for me to tap into the equity that I will have to purchase an REO property and then flip it.
My questions about this are first and foremost, would I be assuming too much risk by doing this? Should I be attempting to purchase and flip an REO property with little experience, right after I have purchased my first home? I would not be doing the work myself, but would be hiring a contractor. This leads to my next question. If I use the equity in my primary residence to purchase an REO property outright, what methods could I then use to finance the renovations? I have been following this site for some time and appreciate any advice you can offer.