Construction Loan vs. Home Equity Line of Credit

[Alan Devey]

​My partners and I purchased a 2 flat a few years back and to say we were strapped for cash is an understatement. That being said, we managed to renovate the 2nd apartment unit, clean up the first floor, and duplex down to the basement to add a bedroom and bathroom. We still have a fair amount of work to do. We need update the siding, build a garage, replace the windows, and update the 1st floor kitchen and bath. Here are the stats: Construction costs - $50,000 Purchase Price - $225,000 Current Appraisal Value - $375,000 Post Construction AV - $440,000 Current Loan Amount - 195,000 Rental Income - $2,800 Mortgage + Taxes + Insurance - $1650 Liquid Cash - $10,000 My partners and I want to get the remaining projects off our plate and are trying to figure out the best way to make it happen. Our intention is to refinance after the project, pay off our loan and pull out some equity for our next project. Here is our question, in our specific situation, what is the most efficient way to leverage our equity to complete the project? We are exploring a construction Loan and home equity line of credit. Looking forward to your comments.