Hello,

My husband and I bought a vacation home (2nd home) about a year ago and have been renting it out on Airbnb since January 2017. We bring in an approximate gross profit of $3k per month and a net profit of around $2k. 

We bought the property using a mortgage, and due to the home being mis-marketed, we got it at a steal of $95,900 but the appraisal came in at $125k. After our rehab of the property and the quick upward trend in the housing market in the area, we estimate the home to be conservatively appraised at $165k if we were to have it reappraised.

We're excited by the success of the Airbnb property but want to give a go at long term renting so as to not put all of our eggs in one basket and start to diversify. We're trying to figure out the best option for financing our next property, and our goal is a duplex for no more than $110k + $10k in cosmetic rehab.

We have some cash in the bank/savings, but not a ton (and we'd like to have much of it kept in the bank as a security net). So, we're looking for the best way to finance our next downpayment + rehab costs. Right now, the mortgage on our 2nd home is financed at a rate of 3.5%, and refinancing would bring it up to around 4.625%, so we think we'd prefer not to mess with our current mortgage. And just as a note, we live in San Francisco and don't have a primary mortgage (we rent) so we can't cash out refi on any first home.

The option we're considering the most is to do a HELOC for part of the down payment and also partially use our cash savings. Is this the best option? Is there any reason this would be a poor option to take? We're trying to follow the BRRRR strategy but are not quite sure we want to let go of our current mortgage rate.

Thank you!