If I got your numbers right, you would have ($235,000 - $135,000 - $12,000) or $88,000 in equity and it looks like it would cash flow pretty well too.

If you are a new investor, probably you will not have a lot of assets and/or equity to worry about (but even that is relative and subjective to each person tolerance to risk) so I would not worry about that till you pass that risk threshold (in my opinion 100K+ in equity, maybe 50K if you are really risk adverse).

I have roughly around $140,000 in equity. 

.- Assuming a $200k house with 20% down and $200/mo cashflow,  - If you throw cashflow at mortgage every month, you will pay it off in 20.5 yrs as opposed to 30  - You definitely increase net worth faster by doing this (an extra $3,948 at year 10, which is pretty small, but still something compared to the total $24,000 cash you would have saved over the course of 10yrs at $200/mo)  - You hit $80k in equity at 6yrs 5mo as opposed to 6yrs 8mo    - this is the real advantage because it allows you to acquire another property faster, but there is a very small difference here- Overall, I would say following about this strategy:  - only do it if you are confident that low-interest fixed-loans will be available 6-10yrs down the road when you would be looking to refi    - would be a shame to lose that advantage for the small extra advantage of paying down mortgage over that time period  - this still seems like a no-risk, no-tax savings account or bond    - instead of parking extra income (from job or whatever) at bank with minimal returns while waiting to buy another property, "invest the money in your mortgage" by paying it down   - I suspect this strategy might start to look better if you had an extra $1-2k/mo from job to put into this to really supercharge equity which is what David was talking about in book, but I'd have to crunch numbers more           - of course, have to make sure that refi closing costs won't wipe out any gains, and you don't risk losing a low rate fixed loan as @Robert Purcell said    - also, I suspect that nominal stock market returns of 7-10%/yr would outperform this (even with capital gains) because the money will be invested for 6yrs before pulling out for a new down payment (which means long-term capital gains as opposed to short-term and you have a better chance to smooth out stock market cycles so portfolio doesn't crash when you want to liquidate and use it as a down payment for property), but I'd have to crunch numbers more- Interesting idea to tune results, but I don't think I'll use it any time soon.

I refinanced my house in November and gained 70k in equity in 5 years and knew there was money to be made here somewhere.

I am thinking of selling one my properties in California that has 200k in equity in order to to a 1031 exchange and purchase a MFR.

I see no compelling evidence that buy and hold forever can produce real returns on capital north of what can be had in equities markets with very few exceptions.

I think the smarter play is to sell them all, do a 1031 exchange, and consolidate into a larger multi-family apartment complex.You'll get all of your equity (not just what you can refi out), gain economies of scale, and simplify your management going forward.With ~$1.155mm in equity you can reasonably look at $3.5-$4mm properties.

You have to have both a buyer and a seller that are both willing and able to close in order to create a transaction, and price and terms are the market mechanisms for equalizing supply and demand to create transactions across a market of buyers and sellers ... inefficiencies can occur when there are distortions in the market that limit the number of buyers or sellers or otherwise creates an inequality between buyers and sellers that cannot be easily resolved by the usual market mechanisms of price and terms.Inefficiencies can have a dark side, as eluded to in comments above ... if an inefficiency is artificially created so that a more sophisticated operator can rip off a less sophisticated, weaker, and/or desperate person, that may be profitable and even legal, but can also be morally appalling IMO ... this never gets discussed in polite conversation here on BP but think it is important to understand.

This is based on the simple 50% rule.Now with regards to the car and refinancing: Have you considered taking the $40k in equity and using that to purchase a true investment property?