Paying off rentals using other rental equity.

[Tim Siocheng]

Hi BP community, i am seeking an advice on what the best course of action to take on my rentals. 

I came across the mortgage company amerisave and they're able to refinance my investment properties debt at 3.125% apr. 

Option A: This includes 3 rental loans with rates from 3.75% to 4.6%. I thought i was getting 1 loan umbrella with 3 properties but instead what i found out what they were going to do was, pay off 2 of my rental properties loans using the equity of 1 rental property with the highest equity. 

the total amount of principal & interest i pay right now between these properties is $1779 per month (rounded up) and if i do this refinancing, my mortgage on 1 rental with alot of equity will be $1457 per month (rounded up) while the other 2 rentals are paid off. This would give me an additional $322 per month of extra cashflow at the end of the day. BUT on my 1 rental where the equity used to pay off the other rental loans will have a -250 cash flow per month. 

Option B. Leave the other 2 rental properties debt alone, pull some money out of the rental property with big equity with the same monthly payments and cashflow (except i'm back to 30 yrs of paying the loan). Use that money to buy more properties. 

what would be the best course of action here? Will there be a big tax difference if the other 2 rentals are paid off while one is negative? 

I would like to thank you in advance for your insight and help.