HELOC vs. Refi - Financing For Next Project

[Nathan Barilka]

Hi all, I'm in need of some advice, here's my situation as precise as I can make it:

I purchased 2 duplexes and am close to finishing renovations on the first one. We've done some pretty extensive work: full interior remodel including kitchen, bathroom, floors, doors, appliances and furnace for one unit. Exterior work includes windows, siding, A/C condensers. Pretty all inclusive. I was house hacking this renovation so I was able to put down 5% at 2.75% on the duplex I'm living in, then 30% at 3.5% on the duplex that had 2 tenants. After paint goes on this week and finishing touches go in, I'm ready to cash out... which is where I'm stuck.

I purchased the property for $170K, I expect it to appraise between $230-250K based on comps in the area. I calculate I should be able to pull $34-50K at 80% LTV (depending on ARV). Since I have a 2.75% interest rate a cash out refinance doesn't seem to make sense. The only other option I can think of wold be taking a HELOC out to fund the rehab on the second duplex. I know HELOC rates are in the 7% range right now, but with as much equity that I have in the second duplex, when I finish those rehabs I should be able to pull out upwards of $90K (also, depending on ARV) to pay that HELOC off.

I know there are some smart individuals on this forum so I want to throw it out there to see if there's another approach I might be missing, or an angle I haven't seen yet?

Thanks in advance for all your help!