Welcome aboard @Matt Henshaw, impressive on your podcast count, I'm still on like 90 something. :)

I'm not trying to be flippant.If the garage space is being used as a bedroom, then it probably wouldn't be profitable to decrease the bedroom count to return it to being a garage. 

Most lenders will count a percentage of the income from the property toward your debt to income ratio.

As $600 is 1% of 60,000 your rental would fit the bill.My word of caution is to understand that single family homes are really good investments as rentals so long as you don't count on the cash flow (in most cases -- NOT ALL!!)

This sort of defeats the purpose.

There are plenty of people at retirement age who do not have $500,000 liquid (or illiquid) on their personal balance sheet.But that 28 number has a downside ... you have a long way to go in your life and lots of things can happen in your personal life and in your real estate business that will alter your business and goals.First, to earn $10,000 per month ($120,000 per year) on $500 K is a 24% return ..... possible BUT you probably can't count on that much return EVERY year in any investment (OK ... somebody will dispute that assertion).I suggest that your (soft) goal for the next several years would be to double your capital to $1 million by doing what has worked for you.  

Is it the case that MOST mortgage lenders require 2 years landlord experience to count rental income, and only a FEW of us like @Dan P's lender and my firm will do the silly online course and consider the box to be checked? 

Keep in mind that the extra debt of the secured loan will be counted against you, when qualifying for the mortgage. 

Refi usually means that you get a portion or whole of your principal back, so in this example, you may want to count that $85K as return of principal, not ROI.So, your initial position is $100K cash.

Do I have to put all my cash in or does it count to have part of it as a mortgage?