So I know there is a substantial amount of equity in the home but I see that using that equity might not be the best move forward.I will have to explore my loan options.

If the profit margin after rehab and selling expenses is substantial (typically 10-20%+), flipping may be better.

We as an industry are doing substantially less loans and way more are audited than have been in the past.

I'm a pretty good sized guy but there's no shame in taking the "no hands" approach :)

I recommend connecting and consulting with an account representative at PadSplit to get their intake and see if they can provide any data on room rental rates/demand.

On the refinance side you don't have any points/fees and depending on the type of loan you refinance that can be a substantial amount.

I have 2 properties that are beside each other in an area that is undergoing substantial development.

Thanks so much everyone, this is all great advice and information. o.k. going to get the loophole out of my head then.As we are based in Hawaii I have been trying to find a market that is "closer" to us, especially since I would want to self manage an STR and the time difference to the East Coast is pretty substantial..

you'll be able to get hard money loan but they would probably want substantial down payment ? 

The area has lots of growth and is expected to appreciate substantially over the next ~ 5 years, at which point I plan to sell to capitalize on that appreciation.