I'd figure I'd ask here first before I ask my CPA.I know someone normally has to have income producing job, business etc.  

Currently a Wholesaler, looking to diversify my talent and buy a multi family to start producing some cash flow looking for 2 -4 unit property. if you have any wholesale deal you want to team on let me know

Albiet he has been breaking even, the above numbers show about 36k in equity gained (not to mention appreciation, which you stated is now 165k).Therefore, he is looking at between 36k and 45k profit if he sold today.If his lease terms are 12 months, then I would raise rents to the estimated amount of 1,350 to produce cash flow, as well as continue to build equity. 

Half measures will produce similar results.

Just read an article today saying that you should NEVER buy any income producing real estate that does not have a Gross Rent Multiplier (GRM) of more than 8.iow, A property renting for $1,250 a month, or $15,000 a year should be purchased for no more than $15,000 X 8 = $120,000.I've NEVER been a big fan of GRM! 

if an appraisal will support it and the property is producing income then I'm not sure why you couldn't cash it out for up to 80% LTV

Ideally you can quality for purchasing the rental property without the income the property is expected to produce, which will make the process slightly easier.

Whatever your decision, just do it right that will produce a daily gain.  

Good debt is debt which pays for an income producing asset.

The best to you and your wife in your endeavors.Learn, Apply, Produce!