Should I use a Heloc to secure financing for a new construction deal?

[Andre Guieb]

I am new to real estate investing and was looking into taking a heloc on my primary to purchase land and do a construction loan. Current value of my primary is $1,200,000 and I owe $380,000 on the loan. Reason I do not want to do a cash out refi on my primary is because my rate is locked at 2.7%.  With rates currently where they are I do not want to touch mine. My strategy is to use the heloc as the down payment to purchase the land and secure financing for a construction loan. After construction is complete I would do a cash out refinance to pay off the heloc and then rent the home with hopes of it cash flowing and appreciating in value. Having trouble analyzing this deal as there are so many variables and I do not have the experiencing analyzing deals to make me feel comfortable taking the risk.

Purchase price of the land would be $250,000 not including closing cost or fees, and construction for a new 3/2 home with an attached 1/1 ADU is estimated to cost around $300,000 - $400,000 finished. So looking to be in for $550,000 - $650,000 and the estimated value after construction is $800,000 - $900,000. Average rent in my area for a 3/2 is $4,000 - $5,000 a month and with the attached 1/1 ADU could rent from $1,800 - $2,500 a month. Bringing the gross rental income to $5,800 - $7,500 a month before expenses and cap x.

Does this strategy make since and is it worth the risk? Open to advice and other investment strategies as well.