Options and Ideas for Home Equity

[Vincent Lloyd]

Hello, community. This is my first post, and I'm a new, aspiring real estate investor. Here's my deal:

My wife and I are going to be buying a house with my in-laws (main house with attached in-law suite). The in-laws are providing a $170,000 down payment, which gives us an instant $170,000 in home equity. We (wife and me) are going to keep our current house and rent it out.

What, in your opinion, would be the best way to leverage this equity to start building passive income?

More details that might help. I'm 38, wife is 32. We live in an area in eastern Pennsylvania where real estate prices are pretty high, so I assume it would be smarter to buy out-of-town/state. 

Any help and ideas will be greatly appreciated. Thanks in advance.