So if income for a property is 2000/month, they count 1500 minus mortgage, tax and insurance.

However, I am not a mortgage lender so I cannot speak in great detail.  

If it's a reverse mortgage.

There are monthly meetings that discuss pretty much anything related to real estate - Landlording, rehabbing/flipping, mortgages/lending, etc.

as a first time home buyer, can I use a blanket mortgage to buy two condos ?

These low down payments will still have mortgage insurance.

Payments currently are 2500 a month  for mortgage taxes and insurance and the place brings in 3000.  

Now we would like to release some of that equity to buy a rental property - but I don't have the credit score to take two dings, i.e. one for the HELOC and one for the rental mortgage. 

Would you pay all cash for a sub 40k property, make a few minor repairs, and then rent it out for $500-$600 per month or would you use the 40k to make a 20% down payment and get a conventional mortgage on a much better property and rent it out at $950-$1050 per month?

Also, would I be able to borrow enough with the new mortgage to rehab it or is that usually with borrowe money like credit cards and smaller loans?