Cash out refi for rental property purchase?

[Corey M.]

Hi,

I purchased my residence 7 years ago for $320k at 3.625%/30 yr mortgage. I have 220k left on the loan and the house is now worth $560k. I am thinking about taking a cash out refi to buy other properties, but I love in LA where just keeping my money in my house would probably net me 10%/yr equity growth. 

Is there any value in doing a cash out refi, which would net me about $260k in cash? I also have about $120k cash to work with and a 760+ credit score.  My industry is very volatile, and so I could feasibly be out of a job for 6 or more months every two years or so. 

I am considering rental properties, but in any relatively nice area in LA, a 800 SW ft apt will be at least $450k, which means I couldn't afford to buy it for cash. 

I'm wondering what I should do with my money. I can keep my free cash in the stock market. Leave the equity in my home and not refi. Or I can pull some or all the equity out of my house and buy another property to create extra income. Mind you, there will be no cash positive properties in LA, but equity growth is great here. 

Thoughts? 

[Corey M.]

But is it worth it to do a cash out refi, pay closing costs, etc to buy a rental in another state? And will that rental net a significant benefit over just a long term stock market investment, which averages about 8%/yr?