I Don't Know Where to Go From Here...

[Vincent Pirrone]

Alright, I have a bit of a problem. I dont know where to go from here. I want to try to get into a BRRRR property. I currently live in a house with a basement that I converted into two units and i currently live in one. The other unit pays all of my mortgage except for about $200 per month. I just refinanced into a lower interest rate but still fha, so now my new mortgage is for $218,989 and on Redfin my house is said to be worth about $258,977. So, two things...

1. Should I get another single family house? I am looking at some houses today that could easily be turned into a duplex like I currently have and move into to take advantage of a low down payment, but the problem is that I was going to try to get a HELOC on my current house for 10k to cover the down payment, but the bank I talked to said the minimum they can do a line of credit for is 15k and my house doesnt have enough equity to let me pull out 15k at 90% ltv. So kinda at a dead end since I dont have 10k for a down payment any other way.

2. Should I build a guest house? I got lucky on my first deal that I'm in because its actually zoned to have two buildings on it. I have already talked to the zoning department for my area and confirmed that I can build a "guest house" if I have no intention to rent it out (but of course I do). So the construction costs for a 700sqft 2bd 1ba guest house would be about 75k and I talked to a bank about a construction loan and they said they can loan me up to 85% of the current value of the property + the construction costs. So that would be (258,977 + 75,000) × 85% = $283,880 So subtracting out my current mortgage ($218,989) and the construction costs (75,000) that leaves me short $10,109 so I would have to get an extra personal loan for 10k (the same 10k problem in the 1st part of this post) And if I did do this, after everything is set and done, I would need the property to appraise at least 327k in order to repay everything if I got a 90% ltv HELOC. Also, I wouldn't have enough to buy my next property after that either...

So as you can tell I am in a bit of a predicament. Any knowledge and advice would be very helpful. Please let me know if you have any ideas on what I should do. Thanks!