Cash back refinance on paid home for investment property?

[John Geer]

Dear all,

Wanted your input on cash back refinance. My primary house is paid off, value ~300K in current market, maybe more. I have a 2nd property that I am leasing out, which is making positive cash flow ~$500/month. 

I am interested in getting a third property in the same area given its location to a large post-grad institution with good tenants. I strictly look for 3 bed/2 bath SFHs. I do not have the cash upfront to place a 20% downpayment on a property at this time. However, I was told that a cash back refinance on my primary home would be a good option to get equity out of my paid-off home. 

Is this a good idea? Or would it be better to just save up money for the next downpayment? The other option would be to get a cash-back refinance on my 2nd property that has about 48% equity (house valued at about 375K). I earned equity on this 2nd property quickly with the recent rapid appreciation in real estate market. My goal is to build a portfolio in the next 10 years or so, and pay off the properties as quickly as possible. 

Thank you all,

John