to leverage or not to leverage

[Fred Stevenson]

My home is paid off, and I'm taking 80% out of my house in a 30 year refinance loan. My plan was to purchase three - five SFR's for cash using 20% of my own cash and 80% from the refinance loan for each purchase. That way I would own three - five rental properties free and clear with a new 30 year mortgage on my house.

However, someone suggested to me that I should consider using the cash from the refi combined with some of my other cash as a 20-25% down payment on propspective rental properties while financing the rest with a new 80% loan using the investment property as collatoral.  With this strategy, I'd be able to buy many more than 3-5 homes, but I'd also be leveraged to the hilt and reduce my monthly cashflows. I'd love to hear some opinions on the pros and cons of these two strategies.  Thanks.