With today's interest rate, this may be a viable option, compared to buying physical RE.

I typically advice a cash out refi over a HELOC if you have an immediate use for the funds since HELOCs have variable interest rates, but you also want to take your current interest rate into consideration.

I’ve had this itch to get into real estate for a long time, but everytime I start to dip my toes in I get the feeling that with prices/rates where there at it’s hard to justify pulling money from risk free 5.5% ?

Valuations prior to establishing residency is tax at different rate.

That rate, TODAY is WAY low!!

The downside of the HELOC is the interest rate is usually higher so you will want to pay it off faster. 

I would weigh those two options out and see what costs less overall between an entire new loan and or the blended rate of the two.

Let's put expenses at 15% since it's a new build, and you're looking at a 10.2 cap rate.

Nobody knows what is going to happen with rates...trying to guess or forecast is a fool's errand. 

That way you can use that 2% to do a rate buy down to ensure a better cash flow.If you are buying it as a Primary owner occupancy I would ask for 3-4% seller credit to cover rate buy down and a portion of closing costs.