I would just do a cash-out refi with a 30 year loan.

If you want to learn more about the practice (and art) of safely and securely finding and funding a PML to see if it's for you, check out my book on BiggerPockets called Lend to Live: Earn Hassle-Free Passive Income in Real Estate with Private Money Lending. 

The seller may face a big tax bill if they receive a pile of cash at closing.

The profit is just the result of my driving why.My "why" for my Asset Protection Law Firm is because I strong believe that you deserve to keep what you earned and built.

Cash flow is the main goal!.

You can do a ‘cash out’ refinance on the rental home as a permanent fixed 20-25-30 year loan to pay off the Heloc on the primary and most likely the equity line on the primary permits a ‘re-draw’ to utilize again. 

Doing a cash out refinance to recoup invested dollars is more difficult due to home values not increasing at 15% YoY.  

Cash.

You posted the raw data, just go one layer deeper to get to % returns to confirm your purchase price in relation to your expected return/profit/cashflow:$5,500 + $3,000 = $8,500/mo or $102k/yr GOI (gross annual rent collected)Knock off 25% for expenses and you are at $71k/yr or $5.9k/mo NOI on this $1.05M investment or holding this at a 6.8% cap rateWith your 7%, 75% LTV loan, you'd be paying $5k/mo for the loan, leaving you with $900/mo or $10.8k/yr in Cashflow.Now to determine your CoC return (Cash-on-Cash), take the $10.8k in CF and divide it by your equity-in, likely ~$300k, so 3.6% return on your cash/equity in this deal.

@Andrew BrownI'm in the Reno Tahoe, Nevada market and we have tools that rate every property in our local market for cash flow potential.