Owner-Occupied Single Family Home Earned Quick Equity - What Now?

[Jason Marshall]

In February of 2016 I closed on my first single family home.  I have lived there and I have rented 2 rooms since day one living almost for free myself.  I paid $150,000 and now it is worth an estimated 185k-195k due to some improvements and the market in the area improving greatly (for sellers).  

I purchased this home with a 30 year mortgage and a KHC (Kentucky Housing Corp) first-time home buyer program.  I have a second mortgage on the house through the KHC program which is a $15,000 loan covering closing costs and $7,500 down payment which is 100% forgiven after 5 years of owning the home.  It is prorated if I sell or refinance.  (in February 2019 it will be at 3 years and I will owe 2 more years or $6,000)

If I refinance I have to pay what is remaining of the $15,000 loan.

Because I have some equity in my home now, I have looked into HELOCs to purchase another property. But I will have to pay the $6,000 penalty to get access to a HELOC.

I am wanting to invest in some other properties such a duplex or 4-plex. I am also very interested in fix/flips/rentals. I do not, however, want to wait another 2 years (time remaining on second mortgage) to buy another property.

I would like some advice on which steps to take next. What should I do (other than be patient and wait).  What other possible options do I have?

Would it make more sense to pay the $6,000 penalty and borrow money against my current house to purchase a different property or would it make more sense to sell and use the cash to purchase a new property (would still lose the $6,000)?  

I am open to keeping my current house as a rental but it is also tempting to sell and take the hard cash.