Rehab Financing Options

[Aaron Carricato]

Good afternoon BiggerPockets community:

First post ever and I'm looking for some advice. I have an owner-occupied two (2) unit and my tenant recently moved. I am looking to leverage some of the equity in the property to repair an overhang and update the kitchens & bathrooms. I was interested in finding the best way to finance the repairs/rehab (i.e. Cash Out Refinance, 203K, Homestyle, Construction Loan, etc.)

I purchased the property in 2009 @ $135,000. Current mortgage balance is $98,300. Most recent refi appraisal in Jan 2018 was $126,000.

In the last 10 yrs. the appraisals on the property have varied from $126,000 to $138,000. The market area seems to hold the value of similar properties to a max of about $140,000. I am hoping to update the kitchens at the very least but not get myself underwater on the mortgage or put money into the property that would value it above the last 10 yrs of local sale history.

My contractor has put the repairs/rehabs for the two kitchens and the overhang @ $30,900. If I do the bathrooms as well as a few other items on the list, the total tops out at $53,000.

I would welcome any suggestions on the best way to finance these upgrades and repairs. I'd like to leverage the current equity, and low mortgage interest rates but not take out a construction loan if I don't have to as the recent rental income ($700/mo) barely covers the current mortgage @ 4.3750%.