Pulled equity.... now what?

[Rainier Guiang]

Suppose you had a paid off rental property and were able to pull $200k in equity for your next investment.  Given that the cashout refi is still a mortgage, what would be the best way to use the $200k? 

1) use the full $200k as a down payment and use more leverage to buy lets say a $750k multi family - in other words leverage to the hilt as interest rates are low!

2) use the full $200k to be a cash buyer of a property and get a smoking deal and then pull out the equity again to buy another? (hard to do this in southern CA).

Thanks in advance!