Impact of Cash out refinance to reinvest in a second property

[Shekhar Ramaswamy]

I have a rental property that has approximately $520K in equity. Currently the cash on cash is almost 30%, but that is also because the purchase price was only $240K in 2004, with 20% down. If I cash out refinance and go back to 50% LTV the cash flow goes to almost zero. If I then use the cash as 20% down for a second property, I will most likely be cash flow negative (in Phoenix) due to the high interest rates. This feels like going backward. What am I missing? Is there a better way to evaluate if taking out the cash and reinvesting will actually give me a better ROI than where I am today?