Should I open equity line to purchase a new home?

[Joel Calfee]

I currently own 2 investment properties. Property 1 has 85k market value with 43k left on the mortgage where we clear about $149 after tax, ins, and mortgage payment. It's rent is under market by about $50-$75. Property 2 has a 65k market value with 53k left on mortgage (bad interest rate just before bubble popped) where we actually lose about $50 per month (looking to refinance property by end of summer). It's rent is under market $50-75, but we really like the tenant and been reluctant to raise the rent. So, I'm looking to get into some more homes. But I'm not sure if I should pay down property 1 and open equity line to purchase a new. Or... Should I pay down property 1, and use increased revenue to pay off property 2 and before looking to new ventures. I could probably get a loan for a new property if we wanted, but seeing that we're looking to refi property 2, I don't want to mess with my credit too much and close up future purchase opportunities. Any advice here?