If we're talking about buying at a big discount with instant cash flow and instant equity (instant appreciation) vs. buying at or near retail, with negative cash flow and hoping for future appreciation, then I'll take the cash flow and instant equity every time.

I want to say thanks to BP members who helped me out with almost instant replies whenever I have questions.

It is currently cash flowing $650/month.Currently, my goal is to add as much passive income as possible so naturally I am saving for another rental property.I’m just thinking, what if instead of buying another property, I just splurge and payoff the $50k mortgage and instantly raise my cash flow to $1,150 (owning the property outright).

He will likely "want" to hold out for the big payday as they all do.So what would be my next step here in knowing what to offer?

It also gives them instant street cred and they use it as a way to market themselves as an experienced guru. 

I will be gaining a huge amount of instant equity for future investment purchases.

Distressed sales may sell below a market value, for lending, that sale price is the value, you can not claim instant value as your equity, not in that market period. 

Usury laws will apply to certain loan types and situations and not others, e.g. pay day loans are typically much higher.

For example -- if 1 of the 3 members happens to find a deal that yields 50k in instant equity, would that somehow be divided up unequally to give the finder a larger share?

When I got my license over 10 years ago, I did so I could get instant access to the latest listings and be first to view and get offers in.