Reserves vs. LOC for Repairs, Maintenance

[Jason Krick]

I am hopefully going to get my first SFR rental property under contract later today, or early next week. Without going through all the details (I will hopefully post the whole story later), the end scenario will be that I complete a 100% cash-out refi on the property, as well as have a $40,000 LOC. I will already have 6 months reserves, and all CapEx items will be new.

So here's my confusing question(s). Instead of working towards saving a large amount of money for maintenance, CapEx, etc, would it make more financial sense use the cash (rent-mortgage) to either a) pay down principal, or b) save for a down payment for another property? I wouldn't do this long-term, but with how "new" everything is, I was wondering if it would be a better return to use the extra money in those two examples. If there was an emergency, I could write a check from the LOC, and I could use future cash to pay it off. I've certainly never seen it recommended, but if I could quickly pick up another property or two, those could build my reserves for me. It just seems like it might be a better use to have the money working for me.

Thoughts?