The problem with this approach is that it is building foundation on a known scam called bait and switch. People, in general, react very unfavorably to this business model. The first dot com boom and bust is almost entirely built on this kind of thinking. You should learn from this failure, don't do this.
It's very very hard to monetize a process that you first offered for free! The problem is that you do not get good feedback on what works and what does not from a business perspective. Getting the business running is much more important part of having the portfolio, artificial portfolios seldom do this for you.
The second problem is that when you offer services at no or low cost you get abused. Your client naturally sees your time as not valuable. Worse if your cheap you proclaim your time to not be valuable. Therefore you end up doing things that you definitely should not be doing.
So a good track record of doing business is what attracts people. Not just the portfolio itself. Being able to do these things when under money constraint is a skill with a lot of worth.
Another aspect is that there are lots of designs that you cannot do for free. Because you need to be able to produce collateral around the design. Now you have a problem, your work depends on spending money but you work for free.
Things you do not learn doing it for free are:
- Budgeting, you have no budget
- Contract making, it is very hard/dangerous to make a meaningful contract obligations when you operate for free
- Pricing, you do not get a feel for pricing
- Self respect, it's very easy to walk away form a free gig. But you don't get the knowledge of knowing when to do so despite money being on the line
- Negotiation skills regarding how to get paid. It's easy to do crazy stuff that's fun for free. But it is a whole other thing to do things when your actually wanting to get paid.
- Most importantly: You are not building a business.
This said, it can work out but you have to be really really good at sales.