Sell home or turn into rental in Austin, TX area?

[Heather Meyer]

My husband and I are ready to get into real estate investing, we are also new empty nesters, want to downsize, and have a good deal of equity in our home.  We live in Cedar Park, TX (Austin Area), our home is 3800 sq ft and we have about $420K+ equity currently in the house.  We have talked about selling the house and using the profit to begin buying rental properties.  Now we are also considering keeping the house and turning it into our first rental property.  Looking for sound advice.  If we turn it into a rental, how can we still utilize the equity in our home to not only buy our next primary residence but also buy at least one more rental property.