Tap rental portfolio equity and reinvest?

[Jack B.]

I can get a total of 200K out of my rentals right now. With cash on hand I'd have about 300K to invest when the opportunity arises. This would finally put the equity in my King County, WA area houses to good use. 

Thing is I'd have less cash flow (but still would cover mortgages and have some cash flow even after budgeting for expenses) and a higher interest rate than the sweet 3.xx rates I have now and less margin of safety in some ways. Tough to sell if the market turns and I only have 25% equity in each house.

Though it sure would be nice to have 300K on hand and maybe 400K by the time there is another major market down turn to invest in real estate, index funds, etc. I mean, at the end of the day, the equity sitting in the houses isn't earning me the money, the ownership of the houses is, regardless of whether I tap the equity or not. Since these are west coast properties in a HCOL area, the equity is where the majority of the gains are, not the cash flow, although that is good. But tapping the approx 130K a year in equity gains ever few years and reinvesting doesn't sound like a bad idea.

Heck, even with the equity I've gained in the short time (my annual equity increase goes up higher and higher as I add a property each 1.5 years) I could get about 3K extra cash flow per month if I bought four out of state rentals in Central Florida for 75K a pop paid in full. They have some nice houses in decent/safe areas for those prices. Even after PM and expenses I'm clearing 3 extra cash flow with that money reinvested instead of sitting there when it could be reinvested...

But what are the risks? I feel like this is the thing I've been missing, sitting restless looking for another strategy to increase my cash flow. This would do it. I mean getting 3K extra cash flow per month on top of other cash flow from the refinanced properties, wow, that would be awesome. I can easily live off 1K a month and go do whatever I want and just bank the rest. This seems like the game changer I've been looking for.