At that point we tested the waters and gave them the option to keep the money or to reinvest it in another property.

Note: This all pertains to the 2022 tax year and I still have a W-2 job which is the main source of my income.Given I've only owned a rental for one year (also my first home ever) and I'm very new to rental-related taxes, I of course hired a "good" tax advisor/CPA to help ensure I stay out of trouble with the IRS.

I have a great nationwide insurance company that I work with that has lots of options and works with investors only.

But I'm almost exclusively sourcing them off-market.

The harder option is to buckle down and pay the down the HELOC slowly, while keeping both appreciating assests.

I grew up a Carpenter, so being able to rent a unit and fix the other seems like a low risk option for getting started. 

If you're interested in an insurance broker that can help you with that, msg me and I will provide a local name of someone that can walk you through some options. 

But when you can qualify and deal with the process before then - usually worth it to do bank options like this until you hit the scaling point (could be 3 rentals could be 5, could be 10 etc - no real "hard and fast rule") 

Option 1 - Cash out Refi Rental ProtertyOption 2 - Sell Property Option 3 - your ideas.

I'll add that for the cash option, you'd need 8-10% cap rate properties which, even in the Midwest, will likely be older Class C/B- product where there is greater risk of higher maintenance and delinquencies versus newer/nicer builds.