It has some equity but not enough yet. 

That's mortgage fraud.If they don't have equity to tap and don't have the cash to lock in a new home first, they'll have to sell their old home first and the buy something.Lenders look at debt to income ratios (DTI), if the some total of the old mortgage and the new mortgage goes over a certain %, which is based on the type of loan they're looking for, they can't get the loan.

We bought at a great time (2011-2013) and at prices that equated to a "2% to 3% rule." 10% was way too high and a couple of years later he brought it down to 7%. 10% was unsustainable and 7% made it more break even.I am sitting on a substantial equity position but I would not do this again.

Not always available, but that's the goal.Does it have equity?

@Anthony Marucci after reserves and expenses, I'll cashflow between $200 and $300, but I'll also end up with 30% - 40% equity from the beginning

You just end up trapping your cash as equity in the property. 

How many % of equity we can get from HELOC?

I would definatly sell now while markets are at their peek.You have almost 200K in dead equity that should be invested and earning a 10% return.

The seller is behind on payments and we're planning to catch it up to date, and give the Seller some cash at closing for this equity. 

Besides a cash-out refinance as mentioned above another option is to tap into the equity via a HELOC.