Refinancing with negative cash flow

[Justin K.]

Hey everyone, 

If the potential money from a cash out refinance is greater than 15 years worth of cash flow on a property, would it be wise or unwise to conduct the refi if the end result is negative cash flow? 

After saving 20% for expenses and vacancy, a property that we've got cash flows $200/month. If we refinance it, then we'll be able to pull out $40,000. We can then use that money to reinvest into either stocks or more properties. However, by doing so we'll be trading a 3.5% interest rate and 200$/month cash flow for (after the last rate hike) probably 7.75% interest and -$300 cash flow until we increase the rent next year. 

Seeing how the rents are rising in Florida, I anticipate the monthly cash flow breaking even after 3 years of raising the rents, but that is speculative. 

I am curious about the pros and cons to each and there is always something that I didn't think about. I think that keeping it how it is is safer, however, if the prices do decline then we may not have as much cash to take advantage of opportunities as we'd like. At least what I can remember hearing from listening to the podcast, cash flow is more important when you're older and nearing retirement (which we are not), and capital is more important when you're younger as to take advantage of opportunity. 

Thanks for your wisdom,

Justin