Using a cash out refinance to get started

[Patrick Staker]

Almost exactly 2 years ago we bought our house, which turned out to be a pretty sweet deal but at the time we got it because it was all we could afford. 

After doing a small amount of work to it we've raised the equity at least $40K.  We bought it for 117K (it needed some work but was liveable).  We redid the kitchen, flooring, finished out the basement, worked on the landscaping...etc.  Our direct neighbors house just sold for $182K and it's a similar size. 

I'm just starting to research getting into Real Estate and I was wondering if it would be worth looking into a cash out refinance to get started in purchasing a new piece of property for renting out.  We could either keep living there or save up enough along with the cash out refinance to find a new primary residence and rent out the current house.  Looking around the area we could get $1500 in rent per month. 

Any opinions?