It is currently rented out to standard tenants but I am interested in potentially converting to a care home model.

Could also potentially get a 2nd behind the first at 2.99%.

The potential to both diversify broadly and own "hands-off" institutional real estate can be very powerful, and many of our investors have done just that. 

Here are some considerations for each option:Option 1: Using the HELOC for a down payment and renovation on a second property to rent:Pros:You can leverage your existing property to acquire another investment property without selling your current home.Rental properties can provide a steady income stream and potential long-term appreciation.You can use the HELOC funds for renovation, which can increase the property value and rental income.Cons:You'll have to manage the property yourself or hire a property manager, which can be time-consuming and add to your expenses.There is a risk of vacancies or unexpected maintenance costs, which could impact your cash flow.You'll have to pay back the HELOC, which will increase your monthly expenses.Option 2: Building a new house in a new community and selling it for a profit:Pros:You can potentially make a significant profit if the market is favorable and the property value increases during the construction period.Building a new house allows you to customize the property and potentially attract more buyers or higher rents.Cons:This strategy involves a higher level of risk, as you're betting on the market to appreciate in a relatively short period.There are many unknowns and potential delays in the construction process, which could impact your timeline and profitability.You'll need to have a good understanding of the local real estate market and construction costs to ensure that your project is profitable.Before choosing either of these strategies, consider the following:Research the local market conditions in Chandler, Arizona, to understand the current demand for rental properties and new construction homes.Consult with a real estate agent or investment advisor who has experience in the local market to get their insights on the best strategy for your situation.Evaluate your financial situation, including your income, expenses, and risk tolerance, to determine if either strategy aligns with your goals and financial capacity.Consider the tax implications of each option, as this can impact your overall profitability.Create a detailed financial plan for each option, including projected income, expenses, and potential risks, to help you make an informed decision.Ultimately, the best strategy for you will depend on your unique situation and goals.

Given they want to cater to lower income tenants, I would be interested in their collection rates, which I bet aren’t great.

Potential ways to spread their tax burden over years as well. 

Unpermitted bedroom conversions would increase your potential liability and may hinder the resale in some ways.

Conduct thorough market research to comprehend the potential real estate markets, considering aspects like employment growth, population trends, rental demand, property values, neighborhoods, schools, and local laws.

It fits within our buy right criteriaWe own 12 units right next door.Newer vintageThe three beds are in high demand, and we are blowing away the 1% ruleThere is very little cap exWe focus on PPU (profit per unit), and this is going to profit nicely and add to our scale in that part of the marketExit strategy is to refinance our capital out when rates drop, and to hold long term.You have to be willing to take what the defense gives you, and you have to understand all of the investing strategies and know when to use them2021 and 2022, we only did about 200 units, smaller deals, but very profitable and we’ve refinanced all of our capital.2023 was an excellent year. 128 units, 105 units, and 97 units.If you aren’t doing deals, you can always be improving operations, meeting more potential investors, and creating more relationships.Life is like real estate.

Mid-Term Rentals are generally the same concerns as STR, but you could argue less potential vacancy and if the property is subject to rent control, it is a potential legal workaround.