Pay with all cash, or use as down payments?

[Jeni Lu]

I will soon have access to a lump sum of money ($40K) from refinancing a rental home that I own free and clear (I paid all cash, fixed it up, rented it out). Should I use that money to buy another rental home using all cash (and refinance again in the future), or should I use it as down payments on multiple rental properties? My goal is to acquire enough passive income through rental properties to be financially free.

Thank you for considering my question!