Any reason for selling a paid for house to buy a new one?

[Jw K.]

I was just going to put our paid for house on the market.   Worth about 280k (mostly land value).  It is two acres in a first tier suburb of Minneapolis/St.Paul (which is pretty rare).  Small, old house built in the 1950s, but appreciating like 20k a year, at least if you look at the property tax statements, although we need to 

get that lowered/re-estimated.

Anyways, have a new child and we were going to sell to get a bigger house, but wouldnt it be smarter to take equity out on it and rent it out?

Or is there good reason to sell for the down payment onthe new house?  Eventually well be using the equity of whatever house that is paid off for investment properties.

thanks for any advice