Best way to finance renos?

[Tyler Jordison]

Hi everybody, 

I just got my first duplex under contract and will be financing it FHA 3.5% owner occupied, so a little good old fashioned house hacking. I have got all the cash I need for the down payment, all closing costs and everything that goes with that, and then probably another 8K-10K for renovations. The property needs a fair bit of work both inside and out, but nothing major (all mechanicals are within 2 years new thankfully). We would like to fully finish the basement on our side of the duplex and "partial" finish the basement on the occupied side. The super nice thing is that both sides are fully plumbed for a bathroom and are completely dry walled, the occupied side even has a fully finished BEDROOM that isn't being counted because they don't have an egress window down there! 

Anyways - I have estimated the rehab to cost around 20K-22K when all said and done so I was wondering, what is the best way to finance that extra, lets say, 12K? Should I get a construction loan... or just make my home loan 12K more than what I bought it for and use that (if this is even possible?).... or some other more creative way all together? 

I would love to know what you all think, and how you have done it yourself in the past. Thanks so much!