I would say that house hacking is a great option to consider. 

If you are married and you buy a new house together do you tell people "I just bought this great new house" or do you tell people "I just bought half a house", or do you say "My partner (wife) and I just bought a great new house"???

My husband and I purchased a 2 family house that was fully occupied with tenants, intending to live in the first floor.

His current monthly Payment Breakdown:- Principal: $314.66- Interest (3.875% rate): $578.779- Escrow: $700.79-TOTAL monthly payment: $1,594.24Estimated rental income: $1.2k - $1.6k per month.Would love to somehow capitalize on the existing fixed rate, but at his current monthly payment and the estimated rent it doesn't seem like a great opportunity for cash flow.

The home was in a great neighborhood and the home was priced at a little under half of what the comps and next door neighbor's houses were valued at.

As you are pointing out - the expenses will all hit at some point if you own for long enough.If you buy a house that needs a new roof and a new furnace within a year... then you need to budget for those expenses in a year. 

I recently purchased my first rental house in Woodstock, GA.

.- When I bought the house, I renovated the apartment and it is currently being rented out.- My question is do I do a cash out refinance or take out a HELCO (the mortgage broker I used originally advised that)?

Then once you close on the house take out a standard 30 year mortgage to pay off the hard money loan?

Personally, I would be hesitant to jump into a deal when the existing partners are cash-strapped.