Question: Tapping equity to cover down payment costs

[Justin Grant]

Hello all - I am a new investor with three properties under my belt so far:

1. My primary residence (Which I've owned since 2019)

2. My first SFR - (Acquired in April 2022)

3. My first STR - (Acquired in May 2022)

My cash is a bit limited at the moment following my first two acquisitions this year, but I estimate that I already have considerable equity in both the SFR and STR. With my single family, if I were to do a cash out refi now, I could access roughly $30k right now. (This property is cash flowing at $230 a month out of the gate). With my STR, I could access roughly $95k right now.

I'm interested in potentially doing a cash out refi on either of this properties to cover the cost of my next downpayment. Does this approach make sense? What are the potential drawbacks and pitfalls? In the case of my STR, how would a cash out refi impact my monthly mortgage payment?

Any advice you can provide here would be much appreciated.

Thanks