Mortgage a House to Buy…a House?

I had a conversation with a friend last night who is interested in starting a business, a private practice of sorts.  Her idea is to buy a small house, establish her practice in part of it, and rent the rest of the house out to others commercially.  The problem is, she was thinking of getting a home equity loan on her current home so that she’s able to do so.

Why a home equity loan?  Because that’s the only way she’d be able to afford to buy another house.  This doesn’t make sense to me.  If you can’t afford to buy a house, you can’t afford to buy a house.  Period.

Why would you put your home and the equity you’ve worked for at risk like that?  Why not just rent?

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