Help choosing the correct path

[Patrick Staker]

We bought our house almost 2 years ago for $115,000 and have about $100,000 left on the mortgage. It's on a 5/5 ARM currently at 2.5%. I'd estimate our house is worth $160,000 currently with the work we've put into it ("zestimate" unseen is $158,000) and our direct neighbors house just sold 2 months ago for $182,000.

I've just recently started to get really interested in Real Estate, right now the focus being generating income from rentals.  I also just recently learned about a cash out refinance.

I'm wondering if it would be worth it to look into a cash out refi on our current home and using that towards a new primary residence?  I believe from similar rentals in our area that our house would rent for ~$1500.  

I'm not sure if there's a better option, such as just saving up towards a new primary residence and selling my current home, using the amount we make off the sale to buy up a couple cheaper properties.  Or something in-between.