Tenant died, need to renovate then cash out refi

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Looking for some insight.. Unfortunately I got a call Wednesday night that one of my tenants had passed. I closed on the duplex last July with a vacant upstairs unit that I completely remodeled myself along with doing two roofs and a 600 sq ft wrap around porch that set me back about 20k on top of the conventional investment down payment. That unit is currently rented and covers my note. 

I knew I would eventually have to rehab the downstairs unit. The tenant had been there 30 years paying well below market rent and going into the deal I knew this would be a major project but I was not expecting it almost a year later. 

I currently have a HELOC on the property for around 40k. The building is in a great neighborhood and appraised well for the HELOC with a dump of a unit on the first floor.

I am tight on cash right now as I started investing 3 years ago and have been actively buying and updating my properties. 

I had spoken to the tenants family and cut them a deal as of now. (I am close to the cousin of the tenant who passed and he has done quite a bit of work for me since I met him about a year ago- he is in construction and does great work). 

I am thinking of using the HELOC (interest only) to renovate the unit and letting the guy stay in the mean time and trade his labor for rent (Bad idea? we have a great mutual relationship). I would then plan to cashout refi when the unit is completed (70% LTV- currently owe 58k comps are around 140ish). Does any one have recommendations for a lender on a cashout refi? Once the unit is renovated I will be able to pull 1k/month. Total of $1750 on the building.

Any advice is appreciated, thank you.