Cashout Refi or low interest rate and cashflow?

[Eric Drewniak]

I recently moved out of a condo I was living in and converted it to a rental property. I have a good mortgage rate in the low 3s, no PMI, and the property cashflows 500/mo. My goal is to purchase another rental property. Property values have increased drastically in the past year in my area. I could refinance the condo with cashout, but would have a higher interest rate as now it is an investor condo. Also, the higher loan amount due to the cashout would cut into the cashflow.

I am interested to hear anyone's thoughts on the situation. Should I keep the cashflow, low interest rate, and try and save up for a downpayment or refi with a higher rate to get cash now for down payment on another rental property?