Cash out refi to buy more real estate.... why?

[Dale Vance]

I hear all the time these investors who talk about buying a property, fixing it up and then pulling all the money out to buy another property.  What I can't understand, is that if you pull 80% of the equity out to buy another property, all you did was make your payment much larger and you no longer cash flow, or just barely make the expenses....   Thats how I see it.

I own several duplexes........on  two of them I have about 42% equity each.  My payment for each of these two are $1350 each including insurance and taxes.  I only pay for lawn care and mgmt fees.  Each building grosses $2700 a month / $5400 total.  I feel like if I went and refinanced to use the money for another property, then the $1700 or so dollars I am making monthly, will become a few hundred monthly dollars instead.  I understand the principal of having a lot of properties to create wealth, but if I can make $1700 a month with two properties, then refinancing to buy 2-3 more properties with minimal downpayment does not make sense to me...... there will be minimal cash flow from every property, and I'd likely be making the same $1700.....

What are some of your experiences.  The system must work, because folks do it I guess......  I'm on the fence about making this move.  I find some security in having equity in the property and not being leveraged 80/20 on a lot of properties with minimal cash flow from each.

Thanks for your responses.

Dale.