How would you use the equity?

[David Clark Roper Jr.]

My mom recently received the deed to the house she lives in that was my grandfathers. It is paid for, and we think the value is around $180,000, but needs 30-40k of work, and could be worth 230,000-250,000 ARV. The home is sentimental so we would like to keep it but we are not set on her living in it. She has no retirement so we would like to add a rental for her soon and she has almost no cash in the bank.

My question is, what do you think may be the best way to extract the equity, and to use the value in this home? Should we get a HELOC and make the repairs? Cash out re-fi and buy a second home for her, and rehab/rent her current home? I even thought about my wife and I purchasing it with a 203k and doing the repairs. Any other ideas I am not thinking of?

Thanks!!