New Investor Question

[Joshua Peglow]

I have what is, to me, a difficult new investor question. Six years ago I went through a divorce and my parents helped me out by buying a house in their name but letting me have the equity. I am going to give them 25k as a thank you if I sell. This is my question:

The loan is a 30 year 3.85%. I owe 183k and it’s worth 375. My new wife and I would like to invest in buy and hold real estate. Should I buy the house from my parents to put it in my name so that I can take the equity out? I don’t love the house and I wouldn’t mind selling but it would require most of the equity as a down payment on the next place (since we would want to upgrade). 
We are considering staying where we are and enjoying our cheap mortgage so that we can put more money aside for investing but then we don’t have access to the equity. Alternatively, we could buy another more expensive house with the lower down payment that a live in home requires and buy this one as an investment so that the 20% down goes to the cheaper house. 
It’s kind of an opportunity cost question because I don’t know how good of a rental it would be. It only has one bathroom and it’s difficult to add one. 
We have about 65k set aside to invest but we live in a HCOL. Really benefiting from the group knowledge here. Any suggestions?