Buy a 2-4 unit, close to home.

If you want to manage your own properties, I would highly recommend buying within an hour of your primary.

I would suggest you do both of what you suggest - meaning get either a new mortgage (more conservative route) or HELOC on the townhome and use those funds to buy your next investment property.

Assuming the area checks out, I’d rather buy in a high price area that has little to no cash flow rather than an area that has cash flow but lower price.  

It’s not a place where you can just buy anywhere and expect success.

@Rory DarcyRecommend you first figure out the property Class you want to invest in, THEN figure out the corresponding location to invest in.Property Class will typically dictate the Class of tenant you get, which greatly IMPACTS rental income stability and property maintenance/damage by tenants.If you apply Class A assumptions to a Class B or C purchase, your expectations won’t be met and it may be a financial disaster.If you buy/renovate a property in Class D area to Class A standards, what quality of tenant will you get?

@Samuel Coronado - the challenge is that there will likely be a very small number of renters looking for a house that size, as well as that can afford a rent amount that high who won't just buy otherwise. 

So if you see any let me know and ill buy it! 

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Our lot is fenced in and we cannot see where he lives but close enough to be of concern, but we want to stay in the same town until the kids are finished school.So, my question is this, would it make sense to rent our home (roughly $2300-2500/mo. as per real-estate agent claims), with the stipulation that the garage is used for my business AND buy a home nearby?