To use equity or not?

[Andrew Vogt]

I have been investing for about 4 years now. I have 2 SFH and 1 duplex. I prefer to buy distressed properties, fix them up and hold. I typically am able to achieve this with no $$ down as I get an as completed appraisal and ensure the property appraises for the $$ I need to buy and fix at 80% financed.

About a year ago, I got a great deal on the MLS and was able to buy the property, fix it up and still have roughly $20k of equity in it (at 80% value- DETAILS-bought for $50k, invested $30k, appraised for $125k. Currently rents for $1750/mo with college renters)

My question: do I leave the equity in the house, or do I draw it out and try to buy a property or two where I may have to put a cash down payment (against my current process of property acquirement)? My ultimate goal is to have a portfolio that has enough cash flow where my wife or I could quit our day jobs (who are we kidding, it will most likely be my wife).

My dilemma/thoughts: obviously the property or two that I invest in will have to cash flow more than the $$ I will have to pay on the borrowed equity (roughly $130/mo). There are a property or two I have found that I project a cash flow of about $500/mo.

My other thought is this: I would be eliminating a nice asset I would have-the ability to get at $20k whenever I want/need it. But to leave it in the house for another yr or two would also be wasting any return I could get on leveraging it.

Thoughts?