Rent or sell primary residence

[Michael Morgan]

I bought my first house, built in 1999 (3/2/2, 1730 sqft, 0.13 acre) in Phoenix, AZ for 166,500 back in 2003 with 4.875% 7/1 ARM (now at 3.375%). I owe about $113,000 on it now. It is currently valued against 12 different comps for approx $250k. It's in a great area for schools and quiet. We lived there for 13 years as a primary residence.

Last year, I took out $70k in a home equity loan from that house for a down payment for the new house (5/3/3, 2812 sqft, 0.41 acre) for $464k I'm living in now, also in Phoenix. My original intent was to sell the first house to payoff the house note and the house equity loan and maybe pay down the new housenote. However, I'm coming around to the idea of renting due to reading this sub.

Here are the potential numbers:

Rent = $1400/month
Mortgage = $959
Home Equity Loan = $552
Prop Mgmt = $140 (10% of rent)
Vacancy = $70 (5% of rent)
Repairs = $70 (5% of rent)

I have a couple of big trees that need to be removed because they are causing issues to the back block wall and raising the driveway/entry sidewalk causing a potential trip hazard. The quote for the tree removal is $1700. I'll also need to replace carpets. I've been considering some basic hard wood flooring. Any thoughts on that?

I figure cap rate to be 7% not counting the mortgage or home equity loan. Cash on cash is at 0 (I only put in $5000) in closing costs. I'm curious what NRR would be over time, especially when the home equity loan is paid off.

I make approx $170k/yr, max out my 401k and Roths for both my wife and I. Only other debt I have is a $10k car loan. I can afford to float both notes by myself, but it does not give me much wiggle room.

Based on the above info. Is the house worth keeping or should I sell it to not be so leveraged and look for better rental opportunities elsewhere?