Using Home Equity For Investment - HELOC vs Cash Out Refi

[Zebuel Early]

I'm an investor living in The Bay Area looking to purchase my first out-of-state asset in Northwest Arkansas. Prices are just too high for me in my market. However, having just switched over from a Sole Proprieter to an S-CORP, I'm having trouble getting pre-approved for a conventional loan due to my income on paper. My wife and I have quite a bit of equity in our home w/ a current 30 year fixed mortgage at 3.375%. We're looking into different ways of utilizing that equity for an investment property. I'm thinking of taking out $200,000 so I can make a cash offer when I find a deal worth jumping on. My options are: 

1: a HELOC from a local credit union with an interest-only adjustable-rate payment for the first 10 years. The idea here would be to make the interest-only payments and eventually refi into a conventional loan. The payments would be about $625 per month on the interest which isn't deductable from what I understand, but it's a low monthly out-of-pocket fee.

2: a Fixed Rate Cash-Out Refi locked in at 4.25% with closing costs around $5k. I'd be jumping up a whole percentage point and paying more per month but I'd have cash to invest. Plus you can deduct interest on a fixed-rate mortgage whereas you can't on a HELOC.

*With all that's going on with interest rates and the war right now, what do you all think the best strategy is in using my home equity?  Do you think this is a smart move right now? Do any of you advise against it or do you have any other ideas or advice? Seems like a crazy time to invest but I don't want to just sit on the sidelines. 

Thanks so much!