Make it a rental or sell???

[Jonathan Lyford]

Hi! 

I’m brand new to this site, but really interested in real estate and can use some advice from your collective wisdom. 

My wife and I are getting ready to move to a bigger house, and I’m trying to decide if it makes sense to keep the townhome we are currently in and make it a rental, or sell it and move one. Some background:

We bought the place for 170,000 and it is currently worth 200,000. 

We owe 108,000 on it. 

Mortgage, taxes, insurance etc... would be about 1030 per month. 

It looks like we could rent it for about 1500 per month. 

I did the rental analysis things on this site, and all the expenses included would come out to about 1250, leaving 250 if profit per month. Cash on cash was low(4-5% if I remember correctly) and total return was about 11%. 

So, do I turn it into my first rental property or sell it? 

My thought was, since we already own it and know about the property, it might be a good first foray into the rental world. But, I know that the return isn’t the highest either, and we could just sell this place and a) put a really big down payment on the new place b) just invest in mutual funds which are less hassle c) take the cash out of the property and buy some other rental down the line. 

What say you???

Thanks in advance for the help!