Options Regarding Equity and Reinvesting

[Mark Sacandy]

A few of years ago a rental, that had previously been our primary home, burned.  We didn't rebuild but rather took part of the settlement and put money down on another rental.  We now have about $50-80K equity in that property (paid $130k and now "valued" at around $200K+).  The tenants are an elderly couple and we won't sell until they signal that they're not going to renew the lease.  What is the best way to use that equity to purchase another property?  Or is that even adviseable?

Another question:  My 401 is dropping like a stone and I feel that it's only going to get worse.  Thinking of eating the tax bill and closing the account to buy some kind of cash flow property.  Opinions?