1031 Exchange or Refin with Cash out

[Don Ha]

I'm a newbie here... I am seeking some advice from the PROs.

I have a triplex with market value about $800K, no loan, free and clear with solid annual cash flow of about $35K. I'm currently thinking to expand my rental portfolio to a apartment complex or a few MFR's with either cash or finance.

My dilemma: If I choose exchange, i'll loose my current cash flow but save money on otherwise cash out interest; or if I refin I'll continue my current cash flow but pay interest on the loan.  The refin loan payment almost cancel out the cash flow...

My question is: Should I do 1031 exchange or refin 75% ($600K) at 6.50% 7-yr ARM/30 cash out?

Thanks in advance for your advice... I also welcome other options.