What would you do re: future investment property

Hi

Very new to the whole financial / property market strategies game, the question I have is about selling our current house, and either purchasing and living in a property that we look towards living in for around 5 years, and then purchase the house we wish to live in for the longer term, and rent out the smaller property, or purchasing a bigger live in for longer house and no investment.

Our current property is 50plus years old, weatherboard – 3 beds, no garage, small front and rear yards ect, we purchased for $170000 ($20000 deposit) 5 years ago, after doing renos we now have a mortgage of $194000 due to renos, and a current valuation of around $270000 – $285000.

We are hesitant to keep this house as a investment property as we are aware its an older house and inevitably will experience problems down the track and so we feel like it might turn into a moneypit, as people without tradie backgrounds or tradie type friends this will be at high cost.

So our options are to

a) sell and purchase a $400000 house that we live in long term

b) sell and purchase a $300000 5 year old townhouse on its own title, smaller in terms of overall land size but pluses include garage, newer with less potential probs, brick so a more reliable longer term investment property

what would you do? is it a waste of cash to sell our house for a house not necessarily much bigger & stamp duties costs ect?

let me know if any other info needed, as again i am new to this so not sure what info is needed

cheers

Mich