Cash Out Refi on My Own Home to Buy with Cash?

[Dean Gemmell]

I own my home in a New Jersey suburb without a mortgage. In this crazy market, current valuation is about 1.2 M. Let's say it eventually falls back to 1M but it should stay there for a while. 

I don't like having so much capital tied up in an asset that I think is at max for appreciation, and I'd like to begin building a cash flowing real estate portfolio. If I do a cash out refi on my home, I could get 400K or more at about 5.75%. I'd basically be getting cash and taking out a mortgage on my current house. Does it make sense to put that cash directly into another property? Or take less out of the refi and use that as a down payment on a loan for a rental property?

Basically looking for ideas to diversity and use the capital in my home more effectively than I am right now.