Converting a 4-plex into an 8 unit, does this make $$ sense?

[Dan Voykin]

This is the breakdown of the deal:

1. I own a 4-plex (2-1 story duplexes side by side) with a-lot of equity.

2. Get a Heloc on my property for a deposit to get construction financing

3. Apply for a construction loan to build a second story (can be built for 100k-150k....I am a GC)

4. Once done, apply for a new loan and pull out equity (or do a 1031 exchange after I sell the property)  from my project for my next investment. (8 units in my area sell for 475k -575k)

Your input is appreciated, thanks.

[Brent Coombs]

@Dan Voykin, what are they worth as-is? My first instinct would be to arrange them to be 2x 4-plexes (rather than 1x 8-plex), or is that already a given? ie. Are Titles already separated?

Reason: So as NOT to eliminate FHA-Loan Applicants/Buyers, who want/need to "house-hack".

Otherwise, the only thing Buyers will take into account is the local cap rate (to try to beat it). My 2c.