HELOC/Cash-Out Refi? Strategy for down payment on investment

[Andrew Jech]

Hello BP community. I am 28 years old and currently putting together my business-plan and strategy for building my investment portfolio. My goal is to acquire my first rental property in the next 6 months, and I'm hoping for a duplex with a gross rental income that will cover the monthly payment on a 15 year mortgage and potentially provide a small upside of positive cash flow I can set aside for maintenance over time. My question is around financing, specifically the down payment on the loan. I have all the basics covered; my wife and I have excellent credit, we make a modest but decent income, and have no debt beyond our mortgage on our own home. 

First, a little background on our situation. Our current home was an investment in itself, though one that we intend to stay living in. We bought the property for $72/ft. in a neighborhood with several recent comps going for 115-122/ft. It is a 2600 sqft. home. The home needed extensive remodeling to bring it up to its perceived ARV of conservatively 110/ft. (probably more). I am about 85% done with the remodel and have saved a lot by doing all of the work myself. Everything that has been completed is fully paid for (again, no debt beyond the mortgage).

Now back to the question. We have a decent amount of money in savings, but not enough for a full 20% down on the investment and, ideally, we would like to keep that liquid as it is our personal savings. I want to take action on acquiring our first doors! I'm confident that we could get approved for a loan on a second property, but what is the best option for us regarding money for our down payment? I've considered HELOC, and have read a bit about a cash-out refinance on our current home, but wanted to ask for advice from BP community members that have been in my shoes. How did you get started building your dream?