Sell or Keep?

[John Lee]

About two years ago, my employer moved and I was forced to make the decision to commute > 1 hour each way or to buy a new place; I elected to buy a new house, but did not sell my previous house because I was upside-down on the mortgage.  Since then, I've been renting it and am now at a point where I must decide to keep renting it or sell it now that the balance is less than the value.  

Here are the financials:

• INCOMING $$ (RENT):

$1200/month x 12 = $14.4K per year

• OUTGOING $$ (MORTGAGE PLUS HOUSE EXPENSES):

$1550/month x 12 = $18.6K per year

•  NET = - $4200 per year ($350/month)

With those numbers alone, it would appear that I should sell ASAP...but...if I look at my mortgage statements, I'm building $800 per month in equity, which works out to a positive net gain of $450 per month (+ $5400 per year).

The intangibles?  Luckily, I can afford to take the $350 hit each month because I have a good job and feel that I'm actually coming out on the plus side of things, as outlined above.  The house will be paid off in 10 years, which will coincide with my daughter going away to college, so I'm thinking this house could represent her college fund.  

Is there anything else I'm missing here?  What would some of you experts do?  Keep renting it as long as I can afford the $350/month or sell it this year and have no liability?  Your professional input is appreciated--thanks!