Feedback about purchasing second property

[MIKE B.]

Hey folks, 

Newby here on the forum, and looking for some feedback about possible next steps regarding the purchase of a second single or multi family home in a tight, competitive market.  My wife and I recently moved across town but decided to keep our old house as a rental since the neighborhood was appreciating so quickly.  After 2 years i'm happy to report that it's been going well, and presently am making ~450$/mo in terms of cash flow off the house, in which we have about 165k in equity.  I spend around 10 hours/mo on maintenance which i perform myself as i have a background in the building trades.  We have 2 young children, and my wife and i work full time, so we do NOT have much free time.

in light of the above i've decided to pursue the purchase of an additional single or multi family home in the Madison Wi area with an eye to buy and hold, while slowly over time adding value to the property and increasing the cash flow.  As i see things, we have 2 options in terms of financing an additional purchase:

1.  Cash out refinance of present rental.

2. HELOC loan on present rental

The problem is, based on the (likely) purchase price and rents in Madison, either of the options above pretty much trade the small cash flow we get right now ($450/mo) in exchange for little to no cash flow in the near term but potentially larger appreciated rewards down the road.  So, my question is this:

does anyone have advice on purchasing single or multi family homes in this type of situation?

I've read so much about "cash flow is king" but in certain markets it seems somewhat difficult to achieve, unless i'm missing something (quite possible)