I have a $2600 mortgage and I want to get ahead of this problem as soon as I can. 

That and it's the old slippery slope problem.  A

Doing a cashout would not really solve your problem as a whole, it sounds like.

Also a 5 minute drive to the 3 hospitals in our area.Supplies shouldnt be an issue.Though they look like they are in a  "run down" area the damage is from a hurricane and the owner I believe has just had a enough as far as being in suit with insurance or whatever.Code wont be a problem as far as general construction is concerned because we will be gutting everything to stud and all rough ins will be redone.

Depending how long you've had it, the mortgage rules have changed in the last 5 years, but with 50% equity and a rental that shouldn't be a problem as long as your current income is comparable or higher than your old job.

I've got the same problem as you Nick. 

Renting the unit should not be a problem as I am in hot market in Texas.

@Kenny Dahill point taken, my apologies and thanks for keeping it professional:)One comment though, just because a proerty will negative cashflow, isn't a reason to automatically recommend DIY to put a band aid on the problem. A

As others have said, it starts with good screening and timely inspections to try and find a problem as early as possible.

@Jacob Mistric esto es la problema!