Jonny Morris I would recommend getting a line of credit (HELOC).

My numbers are pretty tight for Property 1, and it is possible I would need to use a HELOC if I have any overruns.

It can be from your line of credit, HELOC, 401k, IRA (rules apply), or partner.

In less than 5 years you took out $200K in heloc and cash-out refinance money.

We’ve considered taking a HELOC out and reinvesting some of the money because a higher rate on a HELOC would be better than raising the rate of the entire loan.

With this policy it's growing at 5% and even if I take out a loan (at 5% although the rate can vary) I'm not having to pay interest like I would on my HELOC loan payments because the dividend payout happens on the total policy value regardless of any outstanding loan.

Looks like my only other option is to use Cashout Refinance or HELOC on the first investment property which is clean and clear. 

Make sure the rental income can cover the original loan and the HELOC and then use the HELOC money as your down payment for the next home. 

At a bare minimum, if they choose to keep the home, get a HELOC while it's still their primary home.

I just secured a HELOC on our family home and frankly I'm itching to get this money working for us but I want to be certain I am investing in the best market.