One property or two?

[Jon Ferris]

Hello - I'm struggling with a calculation.  

I own a property in an up-and-coming neighborhood and would like to purchase a second with a cash-out refi on the first.  To keep things simple, let's say I have 200K in equity in a rental worth 500K.  If I do a cash-out refi of 100K, I'll be able to buy a second equivalent property (also worth 500K).  I would then have 200K in property worth $1M.  

I earn enough on the first property to cover costs and mortgage, but there is nothing leftover at the end of the year, except a tax break. The appreciation has been huge, and I'm comfortable continuing to invest for appreciation.    

If I'm just interested in appreciation, is there any sense in purchasing a second property?  (Is 200K in one property not equal to 100K in each of two? The first property's mortgage also expires in 17 years, and the cash-out would likely reset the clock to 30 years.  

I could understand bringing net-new money into this market, but taking money from the same market and splitting it in two?

Current: 500K, 200K equity - at 2%/yr increase in prop values, would net $10,000 in add'l equity in 1st year plus any decrease in the balance of the mortgage.  17 years remaining.  

Proposed: $1M, 

Property 1: 500K value, 100K equity - $10,000 gain in equity in add'l equity in 1st year plus any decrease in the balance of the mortgage. Plus tax breaks.  30 years remaining.

Property 2: 500K value, 100K equity, $10,000 gain in equity in add'l equity in 1st year plus any decrease in the balance of the mortgage. Plus tax breaks.  30 years remaining.

And how to calculate the value of a 17 vs 30 yr mortgage?  (the refi would allow me to purchase a second property but extend loan by 13 yrs).

Please help.  Thank you!