Sold it a year after that and walked away with $400k, mostly tax free. 

You can always "borrow" or withdraw the principle since you already paid taxes on it.  2. 

If I have to pay taxes on my income, SO DO THEY!

I got about $4200 back on my taxes last year because of depreciation, and it felt great! 

The value around $20k according to the local tax office.

I have a client whose house is currently worth $500,000 who owes $150,000 on the mortgage who is interested in getting a $250,000 second mortage to use as capital to invest in real estate in Massachusetts area.

If it is possible, is there anything else I should consider before talking to lenders (namely, any tax implications). 

We have used work bonus payments, tax returns, and inheritances to get down-payments.

I plan on requesting the following quarter report if I offer.Average Monthly Expenses per triplex (maintenance/insurance/repairs/utilities/property taxes/vacancy):$730.50Estimated mortgage: $1,132I plan of offering $200,000 - $205,000 due to two of the rooms not being renovated, roof needing work, and after being posted for going on 3+ months.

However I was still tied up in the bankruptcy filing as I was owed money.