Does taking less cash flow to leverage myself further make sense?

[Paul G.]

OK, so to give some background.

I have a nice condo that is cashflowing $300 a month.  Since I purchased, it has appreciated by 85%. Currently worth about 130K, bought at 72K. (20% down 30 year fixed).  There is considerable room above me to raise the rent.  My rent is relatively low for the area because I've had a multi-year tenant.  If they don't renew, I could easily raise it by another 50-100 a month.

My plan was to take a cash out refinance, recouping 30-40K cash, to be used for a second (and shortly thereafter 3rd) property.  By doing this cash out refinance, my cash flow would go from $300 a month to $160-110 depending on the amount I cash out.

BUT, with that extra money, I could potentially buy two more condos to make my cashflow $475 a month. (each additional property would potentially cash flow about $180 a month)

This is with a 8.33% vacancy allowance and CapEx at 5% of rental income. We replaced the entire AC and water heater 2 years ago, so those have lots of life left. At least in the first property. I plan on being a longish term investor, and I wont necessarily need the money at any point in the near future. But I also don't want to bank on just appreciation for the units I purchase.

Are those margins too small and am I leveraging myself too much for only a slight increase in cash flow?  At this rate, I wouldn't be able to finance another property for a few years, which is also undesirable.  

One other option is I can sell the Condo, and take the proceeds of about 70K and try to get into multi family, but the market out here is insane and most of the units are in warzones or close to it.

Sorry for my rambling.