Stuck on next step in financing BRRRR

[Audra Todd]

Hey everybody,

We bought my childhood home at an exceptionally great price and rented it out for about 14 months at a low rate while he worked around the country, but still considered this house our address etc. Our tenants were excellent and we knew before they moved in that their next step was to buy their own house. So now we are back at the house and ready to renovate. I made the mistake of trying to get a HELOC, not realizing that most banks won't do it for a "rental" property (our insurance showed the home as such) and/or a home that is mortgaged through a non-financial institution (the mortgage is 0% interest with my mom-woohoo!). I didn't realize it was pointless to try to get a HELOC to do the reno.

Fortunately, through that mistake we got a free drive-by appraisal that showed the property to be worth $135k more than we paid for it.  So now I'm curious, could I even potentially just do a cash out refi right now (with the home likely appraising for much less than the drive-by, but still hopefully enough to use to fix up the place) then do another cash out refi after repairs OR just bite the bullet and go for a hard money lender now and cash out refi later?

Because we are both handy (tile our own floors, put in our own windows etc), we would like to take a little more time to save money doing certain things ourselves, but I know that would get more expensive with a hard money lender and especially without us currently having tenants.  I feel like I'm also foggy about some cash out refi logistics. 

Extra details that might help: We both have excellent credit. I essentially house & pet sit in exchange for us living for free & not paying for Netflix or utilities etc when we're in places like LA and I also focus on our stock investments etc to make future money for us... ie, my "income" will not impress any banks. He is a freelancer-ish in the film industry, so even when I tried to get the HELOC, I had to give them numerous W-2s and W-9s. Easily doable as I do our taxes etc., but just throwing it out there in case any options would be closed to us for not having 9 to 5 jobs.

Advice greatly appreciated!

~Audra