Couple of questions from a newbie wanting bigger pockets

[Craig Soderdahl]

I have a decent amount of home equity on my primary residence that I'd like to tap into for down payments on some rental properties.  

1)  Is there an advantage to refinancing with a cash out option or doing a home equity loan?  My current interest rate on a 30 year fixed loan is 3.875%, so I'm not necessarily looking for a better rate, but the opportunity to draw on equity.

2) I'm planning to work with a good property management company in the greater Indianapolis area.  Does it make sense to look for investment properties in "B" or "C" grade areas where there are many properties and deals to be had or purchase fewer properties with less deals in "A" grade areas?  

Thanks in advance for your help and hope someday to return the favor giving advice.

Craig