While the closing costs may be higher than a HELOC, the long-term interest savings might outweigh this initial expense depedning on the property value, LTV, credit, etc. 

This would be a good idea if you want to pull any cash out to buy another property.

Avoiding lender fees will save you upwards of $18,000 on average just in acquiring the deal.

RW or any other experienced commercial real estate brokerage will be a good sounding board for your plan and may have some ideas that have not occured to you yet. 

Excellent ideas. 

Most property management companies offer a tenant placement-only service, and if you aren’t 100% sure that you'll be able to pick a solid tenant, it may not be a bad idea to hire a management company for tenant placement only.

Occasionally an applicant comes along with income of only 30x the rent, but they have flawless credit and bank statements showing 250k in savings.

Great idea, @Shanna Chan!

My Primary residence has some equity but I would rather figure out how to collateralize the non-primary house.Any ideas???

One thing I would throw out to you is that tax savings of selling a primary residence.