Rent vs Sell Decision

[Abdul Azeez]

Folks - I currently own a townhome in NJ and I want to move to a larger single family home. I purchased it for $333k in 2007. I would say it can sell for $310k now. I have a mortgage loan balance of $212k financed at 2.625% on a 5/1 ARM which will come up for renewal in another 3 years. Does it make sense renting it out or selling? The numbers look like this. Since its local I may self manage but incorporating PM fee in the below.

Rental value - $2200

P&I                - $936

Taxes            - $709 ($8500 per year)

Insurance    - $42 ($500 per year)

HOA - $110

Repairs and Maint (5%) - $110

Vacancy (1 month) - $184

Leasing fee (1 Month rent in NJ - very high) - $183

Management fee - $183

Net Cash flow - Negative $257

However, if I do not factor in a leasing fee as I can rent it through Craigs list or a management fee due to self management and amortize vacancy over 2 years assuming a 2 year lease which is quite possible, net cash flow will be a positive $201. Kindly advise. The advantage of selling is that if I list it with a flat fee MLS and net $80k after transaction costs, I could use it towards a larger downpayment on a larger house. Additionally, as an investor we are often taught to factor in the other costs above even if we self manage in which case a negative cash flow is a no-brainer. I am a bit confused on the decision and would appreciate some insight. Also, not to forget is the fact that when the ARM resets there is a potential for rates to be higher.

Regards,

Azeez