Looking for best HELOC terms and rate to borrow on existing renta

[Michael Rhodes]

I am 38, married, and have 1 rental home.  It was my primary until 2016 when we moved to a bigger house and started renting this home out.

I'd like a 2nd rental property, eventually 4-5 is my target.  I'm an engineer for a living, and want some passive income on the side.

My rental is worth about 135K and I owe 68K on it.

I'd like to borrow on its equity for a second rental.

I'm looking for a SFH around 125K, 2 car garage/vinyl if possible (much like my current rental).

After speaking with a couple lenders, seems for an investment home, I must do 20% dn, so if I borrow about 25K on my current rental equity, that means a 100K conventional mortgage, and 25K on a HELOC.

Best Ive found so far is Penfed at 5.5% variable (prime +1).  

My goal would be to take a conventional 30 yr loan on the 100K, and pay as little as possible at first, and pay aggressively on the 25K, at about 500 per month (even if it means going negative on the cash flow by about 200 a month).

then as soon as the HELOC is paid back, I'll increase my payments on the primary 100K to accelerate payoff. (Goal is to have paid off homes cashflowing in 15-18 years from now.

My current rental rents for 1375 a month, so I think 1300 is feasible.    I really need to buy something that need just simple paint and polish as after I get the downpayment in place, wont have a bunch of funds for lots of rehab.

Current rental tenants have been there for 19 months and they have been great.

A. Am I looking at my options or th best rental situation all wrong?

B. If I'm on target or close, suggestions on where to go get my HELOC?

C. any other suggestions on best practices?

D.  Suggestions on how to find good buys on properties? (Should I  just call 40 realtors till I find one who focuses on investment properties?

Another tid bit of info.  My wife and I both work, 2 kids.  We gross about 150K a year total.  I try to invest in our retirement plans and college savings as much as possible so I dont plan to sit around and build up 25K in extra cash, so borrowing on exiting equity seems best.

I called a lender who did my current home load on our residence. She seems thorough and been at it a long time, but she tried to tell me I couldnt borrow on rental home equity and told me Id have to refinance that home to get the cash.  That rental is at 3.5% 15 yr with around 7 yrs left, so seems those terms are pretty good and would like to keep it as is and just borrow separately from the equity.

Also, I wanted the HELOC in case the central AC went out, it would give me quick access to cash to replace rather than having to pull from checking or savings.

Thanks all!!  Look forward to the discussion.