HELOC, Cash Out Refi, or 1031?

[Brian Christel]

Hi everyone,

Finally getting around to my new member introduction and have a quick question for the members. 

I bought my primary residence off market last August (condo in a highrise) for 128k. Comps are selling for 160k-165k and around 175k with an updated kitchen. Ideally I'd like to put a renter in it - as it is it would net around $200-$250 per month but closer to $400 if/when I spend a few grand on basic renovations (counter top, knock down small section of wall in kitchen, re-tile bathroom. The area of town is seeing a TON of development (two 15-20 story office buildings two blocks away, 30 story residential upscale highrise with the cheapest units selling over 1mill, new four star hotel breaking ground in six months right next door and lots of highend dining and retail moving into the area. Future appreciation is what is making my decision difficult.

My questions are: 

1. What is the best way to access this equity to begin funding more investment properties, given my situation?

2. I'm planning on spending around $3k on basic renovations. I'd probably put it on a credit card then use an option below to pay it off. Should I just eat the renovation costs, have the renter pay it off, or is cashout refi my only option there?

3. With a 1031 Exchange can you put 75% into properties and 25%(taxed) into other things or does 100% of the equity have to be rolled into real estate? 

My goal is to acquire two properties in the next six months. In 3-4 years I would love to hold 5-10 cashflowing properties while using the BRRRR method to build a larger portfolio.

1. HELOC

 - Pros: No tax burden, liquidity, low rates, CASH FLOW from renter, ability to access equity for investing, could hold property to enjoy the major long term appreciation from the development happening in the area

 - Cons: This is my primary residence so I would have to figure out a living situation 

2. Cash out refi

 - Pros: Cash, could split funds into a second property and live in an apartment - but have two rentals 

 - Tax burden, living situation, fees associated with refi

3. 1031 Exchange

 - Pros: No immediate tax burden, access to all equity, could roll into a duplex, small commercial, etc

 - Cons: Paying realtors, closing costs (many in my building have seller pay closing), etc

What sounds like the best option for my goals?

Thanks everyone!

EDIT: Worth mentioning this property is financed at 3.6% with a 3.5% down payment and bought for 128k with around 5k down and 2k for closing.