If you're in a better situation, and have excess capital, I would do both.

In RI our lease says we can charge for excessive water use.

Good question...I've tried sheriff sales, tax sales, excess inventory sales...without much success and spent alot of time.  

He may be open to lending you any excess funds.

obviously depends on goals, but I would suggest the mortgage, as leveraging the investment will bump up your ROI and enable you to use excess cash to buy more

When that savings pile gets big enough that you have excess beyond your emergency reserves, then start focusing on how to earn a return on it through REI, stocks, whatever.Whether that excess needs to be $5000 for marketing as a wholesaler or $25,000 for a downpayment on a $100k duplex or $50,000 for a downpayment on a $200,000 quad is up to you and your market and your goals, but I think the message of save before you invest is a very sound one.Telling someone "just get started!"

Any excess proceeds go to the next lienholder in order of priority (2nd).

What I may do in a bid to try and protect the triplex from redevelopment would be sell off the excess land or do the developer partnership approach,  but sell off instead of keeping the finished properties,  and once that process is complete,  sell the triplex for its value as a small investment property.In any case,  its good to have options I suppose.  

The con is that I probably paid too much but with what we've been able to do with improving the cash flow it makes too much money and outstrips the depreciation so we have to pay taxes on the excess.

I guess you're saying that the excess cash flow is the risk premium I'm paid for what eventually will be some extraordinary economic loss above due to the social-economic factors of tenants and the older age of the properties.