Advice on how to leverage equity from first home

[Kyle Richardson]

My wife and I bought our first home 3 years ago. Lived in it for a year and have been renting it since then. We do not have a traditional loan with a bank on this property, we have a 15yr mortgage with my grandmother. Since it looks like we own the property we have been thinking of pulling some equity out to get a second rental. Would it be best to pull out enough for a down payment on a ready to rent property, or pull out more to fund a rehab and rent?