Triplex Purchase advice please

[John Schutt]

I currently own 4 SFR rentals in the Kansas. 3 are paid off. Each worth approximately $250K

Recently I came across an opportunity to purchase a triplex. It was suggested that I could get a commercial loan with no money down if I used one of the paid off rentals as collateral. All previous SFR have traditional 30yr notes.

After a bit of number crunching I discovered that while the property would cash flow with 100% financing, it carried a larger upfront cost to close, and a slightly higher interest rate. A traditional 30 year mortgage would provide higher cash flow, but with 25% cash down payment. ( approx $60K)

I have the cash for the down payment, but was thinking I should keep the cash for repairs and upgrades to raise rents, or better yet purchase another triplex. 

My question to you RE guru's is should I use the paid off rentals as Leverage, or go for the cash flow?

Thanks in advance to all respondents,

John

[Seth Williams]

Use the paid off stuff as leverage, but maybe in the form of an investment style HELOC or a portfolio loan total for all properties. As long as it substantially increases your cash flow and is worth buying, I would do it. That being said, to your point, if you have the cash to do it you can always do it and refi the singles later to pull out cash as needed. If its worth buying, go talk to a loan / commercial loan guy and figure it out - Thats what I would say. The triplex would probably still be purchased as an investment mortgage, not commercially, but its all going to depend. @Upen Patel should be able to assist.