How best to use $400k?

[Heather Lanser]

Hey there! My husband and I are sitting on a pile of cash ($200,000) that we've been squirreling away for 5 years in order to buy a bigger/nicer primary home. 

BUT...

We live in California, and even in the rural Central Valley prices have gone nuts (a nice 2,500 sq ft home on an 8,000 sq ft lot in the nice part of town is going for $600,000) so we have decided we would rather put that money to work.

We currently have a single unit (SFH--3/2) in our town that we purchased for $150,000 in 2009 that we can now sell (easily) for $300,000 (the mortgage is currently $79,000). The rent is below market at $1,200 (long-term tenants, husband willing to raise the rent $50/$75 a year to reach market level).

Here's what I'm thinking--take our $200,000 cash, sell the SFH, and invest our $400,000 in a more favorable market/endeavor than SFH.

What would you do with the money if you were in our position? 

Thanks so much for your input!