Philly Income Property

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My wife and I are going to give the manage a rental thing a try. We're trying to do it for zero cash out of pocket - just leveraging our credit and equity in the primary residence.

Background

We bought a house in the Port Richmond area in June of 2011 and have since renovated it (1/2 diy, 1/2 hired a gc). Between buying the house and renovations we put in roughly 150K and have a mortgage of 115K. We think our house is worth ~200K based on realtor.com browsing.

Update 10/20

In the middle of October we applied for a HELOC from our credit union. We shopped a couple of banks (National Penn was/is offering 100% equity on HELOC's) but decided to go with our credit union (PSECU) because they charged zero fees, and paid for the appraisal. All we had to do was fill out the paper work and up to 80% equity is offered at 3.25%.

Update 11/3

Drive by appraisal came in at $154,000. I called the bank and challenged the assumptions. The drive by appraisal understated our square footage by 300 sq ft and didn't give us credit for our recent renovations. PSECU paid for an appraiser to come to our house and do the whole shabang of measuring the house, taking pictures, etc.

Update 11/9

Final appraisal came in at 215,000. 80% HELOC gives us access to 56k. I'm starting to research guidelines on using HELOC money as a downpayment - i'm seeing mixed things on-line. Some places say it's fine, others say banks won't accept and others recommend cashing out the HELOC and "seasoning" the money by letting it sit in your account for two statement periods. Anyone ever try to do this? Any other general advice?

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Update 11/20 - HELOC finalized. I called the credit union and they allow me to use a secured loan (heloc) for my downpayment. Woot! Now i don't need to wait the 2 months for my funds to season. Last night i applied for the mortgage pre-approval and got my letter. Then I let my realtor know and we scheduled time to go look at houses this Sunday.