Going rent for the side my father would live in (2 bed, 1 bath) is about $900-$1100, and the other side (3 bed, 2 bath) could go for $1300-$1700 per month. 

He built a garage with a 2 bedroom/1 bath apartment above it and was able to pay both loans with the Cashflow.

If it's not a good investment property the numbers will tell you.Jaron,We brought the present home in 2012 as our first home.Its a new construction.I did run the numbers on the existing home.As I mentioned we paid 212k in 2012.Took an FHA and refinanced to conventional a few yrs later.(3.5% for 30 yrs Balance on mortgage 160k).Mortgage runs to 1200/month.Our property can be rented out as is for 2000/month.Its a 4 bed 3 bath and rents in our community start with 2000 range for our sq footage.I want to pay off this house asap in next 5-6 yrs and free up money to invest in another house.The houses in our community are in 450k+ range.Hubby is preapproved is not the reason for another house.The other house is right opposite to our community  and is a 5 min walk from our house.So its not a big move.Except that I want to move closer to our kids friends.Our lender metioned Heloc maybe a good choice for further investments.I want to explore Home Equity Loan route to be safer.I am still a layman in Heloc route and dont want to burn fingers.Any advice.P.S.What is COC? 

Unit=own entrance, kitchen, bath; a completely livable area?       

The three downstairs bedrooms share a hall bath.

If you would not let your daughter, wife, or young kids walk down the street, that is a pretty good indication to stay away from that neighborhood.

We took a large single bathroom and split it to a master and another full bath.

We took a large single bathroom and split it to a master and another full bath.

Lenders do not want there to be loose wires, no roof, boarded up or cracked windows, no kitchen or baths, missing flooring.

Main House is currently a 3 bed 2 bath 2,000 sq ft, Renovation of will change this to a 4 bed 2 bath.