Two part answer:
First, (skip to #2 to bypass the admonition to change you mind): You didn’t provide details, and I’m not going to ask, but for the sake of argument, let’s assume the renovation is primarily cosmetic - redo the kitchen, the bathroom, maybe remove a wall, change light fixture, change a sliding glass door to french double door, etc…, and not due to something like a recently life changing disability that requires changes for the house to be functional. Keep in mind that you’re looking at taking on consumer debt (sorry everyone, a non-cash flowing house is consumer debt), and probably a lot of it, over the next 15-30 years.
Second, to directly answer your question, were I doing a renovation on a paid off rental property and needed a loan to accomplish it, I would look at the following (in order of preference):
- Refinance the house with a 5/1 ARM
- Home Equity or HELOC
- Peer lending such as LendingClub.com (based on a URL you provided, you’re may reside in Canada, and this may not be an option for you)
- Sell the house and buy another with the required work already done
- Save money until I could pay cash
I’m personally a big fan of investment debt, so I would err on the side of using debt for a positive cash-flow property as long as the cash-flow stayed positive with the new debt added to the equation. I’m strongly opposed to consumer debt, though, and would argue day and night to avoid using debt to pay for something that does not provide a return in excess of the debt payment.