There’s only one hole in your plan. How are they going to get a mortgage on the second property when they still have the mortgage on the first one? The bank is going to see the other mortgage, and decline the loan, unless they have enough debt to income ratio to support paying BOTH mortgages, or they have 20% to put down on the second property and declare it as an investment property. It seems to me though that the bank would look long and hard at your first property before loaning you money on another one…. At least I would!