Should I open a HELOC or pay off my house

[Robert Rodriguez]

Few years ago my wife and I made the decision to pay off our rental property. Not my thoughts but hers, she just felt more comfortable/less pressure knowing we didn't have 3 mortgages due (our own and two rentals). Of course i thought, use the money to get more properties but i listened.

Well here i am $17k away from paying off one of the rentals and a contractor friend comes to me and says, he has money but is tired of just doing contracting for investors. I want to have my money do stuff for me too. I know he knows all the ends and out of construction just not the real estate side. So, he wants to partner with me and flip some houses on the side.

i think it's a great opportunity and as i look for financing start to think. Should I finish paying off my rental (last $17k maybe take two months). Or should I open a HELOC on the property and use that money to buy a house cash. Pay back the HELOC as we fix. Then when we sell it pay the HELOC off. Then repeat.

Or if we need a buy and hold exit strategy. Use the HELOC to buy the house cash, rehab it. Put renters in that can pay my HELOC. Then when favorable interest rates come around again, Refinance and pay off the HELOC ... Then look for another property.

the other alternative would be finish paying off the rental. Realize i reached my goal. Then take out a hard money loan to purchase the next property. If normal financing won't lend based on condition of the house.

If i owe $17k and my house is worth $400. Will HELOC let me get it for that much? Or is it a percentage of the home value? Do they allow HELOC to be in the hundreds of thousands anymore? If i pay off the rental will i be able to get a HELOC then? Or is it easier if I'm still carrying a mortgage?