To use home equity or not...?

[Jonny Morris]

We bought for about $363k. Put down 80k on the house to avoid mortgage insurance.

We have now put about 50k into developing an apartment above garage as our "1st property" rental which generates $1250 per month.  Recent city valuation puts house value about 60k+/- from what we bought at.

Question: I would like to use equity from our home to pursue a second investment. My wife sees this as a second mortgage and is nervous...

 Any advice, numbers or light anyone can shed on my scenario? I feel I am in a strong position and want to capitalize on current opportunities.