Is this refinance rate too high?

[Jason L.]

I'm looking to refinance a duplex I have in Saint Petersburg, Florida. I bought the house for $170k using an interest only private loan (I pay $650 in interest per month), and then I put an additional $30k of my own money into renovations. I would guess the house will probably be valued now in the $230k range. I'm obviously trying to refinance the $170k that I owe (around 73% LTV on $230k), and then use the private loan to go buy another in cash.

I spoke to a lender who told me that because the house is a duplex and not a primary residence, the best rate I could get on a refi will be around 5.75% on a 30-year fixed. That would put my monthly payment around $1000, which would essentially kill my margin on this duplex. So my monthly payment is going up over 50%, I'm taking none of my own money out, and I have to pay a few thousand in closing costs to boot. This is obviously untenable.

Is this really what I should expect on a refi? How has everybody else been able to make situations like this work?