Should I refinance my duplex to and buy an investment property?

[Katherine Rossell]

Right now my partner and I are grappling with a decision, and we could use your help!!! Any thoughts are good right now!

We purchased an REO duplex last October. Because of the condition I had to get the property with a variable rate commercial loan. Now that it is fixed up, I decided to refinance it to get a fixed rate conventional loan. We can take around $18,000 out of the equity in the house.

We put in an offer on a single family home that doesn't need any work. My calculations show that the cashflow would be around $400 a month. We could use the $18,000 to purchase this single family home, however the cashflow from the single family would almost be washed out by the added expense of the duplex thats including the taxes and insurance. 

I am waiting to hear back from my mortgage lender with the actual payment numbers for the loan. The numbers I provided are my assumptions based on previous conversations I have had with the lender. 

What should we do? Do we take money out of the refinance and buy the single family? Or do we just refinance and keep the loan where it is and continue to make the same cashflow on the property we have?