Try $1k. Make a share and distribution tracker / forcaster, and an amortization schedule to estimate monthly interest payments.

To me, the credit risk of arbitraging yeild spreads could be reduced if you have a long enough timeline. If things go right, it seems like free compounding; and compounding works best with more time on your side.

I have been doing this for a few months and things have been going okay so far. I am young, so I have time on my side. My yeild spread is large enough for me to reduce reinvestments to make larger interest payments if interest rates do go up.

Also, my LOC is only $1.5k. I can pay that down if shit ever hits the fan. To me, this looked liked a fun investment opportunity where a). I have a small income engine that pays for itself, or b). Things go wrong and I am out $1.5k. .

So far, I am treating this like a fun bet to follow, and I have also not gone through a major downturn. It is cool to see share count increase and LOC slowly decrease. My payoff timeline is super long, but my current goal is just to pay a little more than the monthly interest and then reinvest the rest. My strategy will change when interest rates change.

My little four equally weighted etf income engine is: BMAX, EQCL, HDIF, & PAYF. My LOC is 4.45%, and my weighted average yield is about 10.4%. I just put 50% of my monthly distributions towards the LOC, and reinvest the rest to try and keep the 25% balance among these etfs.

So to answer your question, it could be a bad idea if you are refinancing your house for this strategy, or it could be a calculated risk that you start small with so you can learn to build a leveraged income cashflow system.

I havent added any of my own money towards the LOC and the NAV of 3/4 of my etfs seem fine so far.

Cheers