Starting small -- or big (keep my rental or sell it)

[Ryan F.]

This is my "dillema". Not really a dilemma, more just my thought pattern. 

I have 1 rental property, which I inherited. It is worth about $100k and has a $25k HELOC on it -- therefore, after closing and paying off the HELOC I'm thinking I would walk away with about $65k.

The HELOC is $120 per month with $400 in taxes per month and $80 in insurance per month. Renter pays everything else. $600 total expenses and it rents for $1100, resulting in a $500 cash flow per month.

I could:

1) Keep this property (it's in a suburb with the city pushing in on it a bit), and save up $20k in the next year to purchase another 100k rental property. And go that route every couple of years or as soon as I could save another $20k.

OR

2) Sell my rental property, take the $65k and attempt to purchase THREE 100k rental properties, each with $20k down.

OR

3) Sell my rental property, take the $65k from it and a little savings and purchase a 10 unit apartment building carrying a $300k mortgage with a supposed $35k cash flow.

Thoughts?