Buy 5 more rentals or 4 while keeping more cash?

[Jack B.]

I'm selling two rentals this spring. Not only do they have equity positions of more than 50% each, they are also nearing capex and I have some neighbors and an HOA I'm dying to get rid of....But I digress....

I am debating whether to use the proceeds to buy 5 more (cheaper) rentals at 350K each, or just buy 4 more rentals while either keeping some of the cash OR using some of the cash to pay off my primary residence. I could keep some of the cash without doing a 1031 exchange or paying capital gains (though I'd still have depreciation recapture potentially, but not necessarily on one of them, long story) since I lived in them for 2 of the last 5 years.

I calculated the opportunity cost of only doing 4 rentals the first year instead of 5. It's 45K just from not buying that 5th rental the first year, assuming the market keeps going up, which it should due to supply/demand. Holding onto the cash is losing money to inflation, and I already have a couple hundred thousand in reserves that I could use to pay off my primary residence as it is. The opportunity cost of THAT money that I already have to pay off the mortgage is about $700 a month when you factor in interest savings paying the house off vs investment proceeds if I invested the money in the market. It's higher when you factor in the additional money above the mortgage payoff amount I have, but in case of job loss or huge vacancies, I want to have a nice buffer. Right now I just hold onto the cash because although it is not earning money, I can use it for emergencies AND I lost no money to inflation if I use it to pay off my house...

I made a decision similar to this when I was younger and it was the right decision. Coming out of college I had the chance to pay off all of my student loans OR hold the money for a couple years in case an opportunity presented itself. Sure enough, I bought a paid off house and lived in it rent and mortgage free for 2.5 years, rented it out for almost 4 years with huge cash profits each year that paid my mortgage on a new house with 3.5% down (lol), then sold the rental house for almost 3 times what I had paid for it....It was a good play....Just recently (last year) I sold that house and put the money into two new houses....

Sometimes just pooling cash it the best way to go, and I already have a fair amount of cash on hand in case of job loss, illness, vacancies at all rentals for a year, etc. I'd also once again be financially independent if I paid off my primary residence (I've kept investing proceeds so I go back and forth between being FI and not). There would be some peace of mind doing this, BUT, If I had to in an emergency, I could also buy a paid off house in Aberdeen for a fraction of my primary residence mortgage balance and have huge tax advantaged cash flow from a mortgaged rental that has seasoned nicely with rents increasing year after year, and be FI AND close enough to manage my rentals AND within driving distance to a decent job market (Olympia and Tacoma). 

What are your thoughts? Is there a perspective I have not considered? Mind you if I buy 5 more rentals I'd have 7 rentals and a primary residence....I'm quickly approaching the 10 houses limit for conventional financing, and I'm thinking of maxing it out...

Another option is to pay off my primary residence and two rentals with the money, and have 3K a month cash flow after expenses, only two rentals to manage, and a paid off place to live. My living expenses are about 1K a month in a paid off house (with my gf living with me). But this doesn't build wealth as fast as buying 5 more houses....