Cash-out refi or HELOC

[James Thiel]

I am in need of some advice and thought I'd run it past the BP community.

I have several rentals, two of which I need to take some action on.  

1) I owe $142K and value is $335K, so solid equity and low LTV.

2) I owe $208K and value is $230K, not great at all.

Both are on adjustable loans and have been for years, but it's worked to my advantage due to low rates ... so far. Part of me wants to get them both into fixed mortgages just to be safe, but I would also like to take money out of #1 and invest some more.  However, my real problem is that I am CF negative on #2 by $230 because the rate adjusted 0.5% this year, but more because my interest-only period expired and I had only been paying the interest for years.  I know lame.

My options are take out a HELOC on #1 (I've found one bank that can go to 65% LTV), which gets me $75K if I wanted and go buy more properties, and do nothing on #2. Or I can do a cash-out refi on #1 to maybe 55-60% and use the money to refi #2 down to 75% LTV. I'd then be CF positive on both. Problem is closing costs for two loans.

Another option is sell #2 now and basically break-even, but I'd lose my original down payment.

Could also 1031 #1 using full gain of $150K to a multi-family or some other properties, again doing nothing on #2 but hope to get more cash flow on multi to offset $230 negative CF on #2.

Wondering what others might do with this scenario? Also, any lenders out there that refi to higher LTV on rental properties?

Thank you much!