How to analyze existing residence as a rental

[James Rigsbee]

Hi all. New member. First post. I am moving and considering renting out our existing residence (4/3 single family) as our entry into REI. When I run the numbers, it isn't a home run and doesn't meet the 1% rule ... but it will cash flow, and may be a good base hit to get started. How do I analyze the Cash on Cash Return to determine if I should rent or just sell and then take the equity in search for a better deal? Do you run the numbers based on the Cash we put in when we bought 3yrs ago (6K annual cash flow / 23K in = 26% return) ... or ... do we run the numbers based on our anticipated equity if we sold (6K annual cash flow / 90K (equity minus closing) = 7% return)?

Thanks James