To HELOC or not to HELOC?

[Nicole Heasley Beitenman]

Hi BP! 

I currently live in a SFH that I bought with an FHA loan and house hack by renting out the spare bedrooms. I saw this as my "starter home" and did not buy with an REI career in mind. Now that I know more, I want to kick off my BRRRR strategy by doing a 203k on a MFH. I plan to keep my current SFH and rent it out.

I refinanced my current primary so I could get a 2nd FHA loan. When I refinanced, the appraisal came back about $20k higher than my original purchase price back in 2016.

Here's my dilemma: Should I take out a HELOC on my current primary before pursuing the 203k? It would either help fund another rental, pay down other higher-interest debts, go towards improvements on my current primary, or serve as an emergency cushion.

That being said, it's a really small amount. If a different appraiser values the house lower, I've just wasted time and a couple hundred bucks. Is it worth pursuing the HELOC, or should I just start working toward my next house hack?

TIA!