3 rentals and looking to expand

[Clinton Keith Cunningham]

I have two single family homes with CF combined $600 a month. Debt payoff on home # 1 is 28k with low fixed rate debt. It rents for $850. I am needing to refinance home #2 from an ARM loan to a fixed rate. I have two scenarios I am considering. I do want to grow my real estate portfolio. I wanted feedback from the great people at Bigger Pockets.

1) Refinance and pull 20k out of home #2 to pay off home #1. My thought process would be I would increase cash flow. It has a long term tenant in the property. IF and when the tenant leaves I could turn it into a short term rental. It is near a hospital so I was considering marketing to travelers. With it paid off I would feel more comfortable jumping into the short term rental game. 

2) Refinance and pull 20k out of home #2 to use as a DP for a new investment property. 

3) My w2 income has increased and I could it to save for a 20% DP for a new property without doing a cash out refinance on home #2. This would keep CF at home #2 the same or may increase after the refinance. 

[Kevin Romines]

Hi

If you can cash flow $300 a door in your area, I would concentrate on buying as many doors as you could. These sound like all small purchase prices in relation to what you are getting for rents, so buy buy buy. 

Regarding financing, with loan amounts that are below $100,000 your best bet is a local credit union. Credit unions are regulated differently than mortgage bankers and brokers, so they can make those small loans, where as companies like mine are limited to $100,000 or more on the loan amount due to the closing costs. 

I hope this helps?