The refinance step is where you pull out this equity, typically in the form of a cash-out refinance.Here’s how it works:You refinance the property at its new appraised value (after rehab and renting).You take out a new loan based on that increased value, ideally for the full amount or more than what you originally paid for the property.The goal is to pull out enough money to cover the cost of the original purchase and rehab (or even more, depending on the property’s appreciation).This allows you to recover your initial investment, which can then be used to buy your next property.5.

The main house is original (this place was built in 1924, very cool) and we rent it for $1,650/month.

What documents do they require, what credit scores do they allow, how do they verify previous rental history, etc.?

Walking score of 95.Pre COVID rental numbers:Monthly gross rent $15,250Cap rate 7.1%Future rental numbers:Estimated Monthly gross rent after current tenants move out $13,950Cap rate 6.5%Because monthly rent looks to be about 20-30% more if you rent by the month, I am considering renting out my duplex for monthly rentals on Airbnb/other sites and potentially for travel nurses (ideal because several hospitals are walking distance to my house).

I was told that the dilution of my original investment would be 21.8% if I did not participate.

Glad to see there are still some original voices on here. 

I recommend that you find a trusted or recommended Mortgage Loan Originator (MLO), who can give you options for property-based loans (mostly investment loans) and they don't use your taxes but the P&L of the property.

My name is Cesar and I am originally from Puerto Rico but have been living in Virginia for over 20 years.

Like @Tom Wong I'm originally from Honolulu, and have been in Japan since '97.

Some of these comps aren't in the same subdivision and the sqft for all of them are a lot less than the original property.