Pull equity from a paid off rental?

[Ryan B.]

Hello,

First, a little back story.

I currently have one rental property and I'm looking to expand. The one property that I do have is now owned free and clear. My property is located in Las Vegas and I have a management company hired since I live in the Chicago area. The property value is now 3x what I paid for it. I'm currently saving for a down payment on my second property, but it's taking a while. I'm sure everyone else has noticed that to purchase a sfh that cashflows in this current market environment, approximately 40-50% down would be required. I'm looking to buy another sfh in the Vegas market. My credit score is over 800 and my dti is very low. My only debt is my primary residence.

So here's my question...

Would it be a bad idea to pull equity from my property to purchase one or two more properties? I could pull $200k-$300k out and put $100k-$150k down on each new property, or like $200k on one. It would still leave me cashflowing on my first property and my new one or ones would as well. I'm hesitant because of the interests rates I'm seeing on mortgages and the cash out refi that I would get though. Eventually when rates come down, even if it's years from now, I could refi to a lower rate and have each new property cashflow stronger.

I've always heard that once a property is paid for you just leave it alone. But having that much equity sitting around seems like a waste. Considering the cash out refi payment and new mortgage payments, my actual cashflow would be similar to what I'm receiving now but with the added benefits of principal paydown on multiple properties and the tax benefits each one would bring. Also, I do have enough money set aside to cover repairs on any new property, so the equity pulled out would just be to cover a down payment.

Also, I do have a primary residence with over $200k in equity but I'd rather leave that one alone.

Thank you in advance for any advice. I've been contemplating this for weeks now.