Need Finance Strategy POV for ADU Conversion

[Mark Aco]

Is it better to get a HELOC or use cash/retirement funds to pay for ADU conversion+rehab? The plan is to eventually rent out both ADU and the main house and buy/live in a new investment property. The current house has equity of about 300k.

Opt 1: Get HELOC — Cash-out Refi (to payoff HELOC) — use (unused) cash for new property
Opt 2: Use cash for ADU/rehab — Cash-out Refi (use as down for the new property)

Thank you so much!