Sell or Rent the Townhouse and Buy a new house

[Siqi Lihu]

Hi - I would like to hear some opinions on my situation right now, I think I have done a fairly detailed analysis in my head, but just want to see if everyone agrees, if not, why not? Thank you all in advance! 

I have a townhouse in Reno, NV (growing very quickly with the tech boom and population growth from CA), purchased right after college,  

Purchased at 165K, owned for 3 years

Owe 150K at the moment, market comps show it can sell for $270K, if not $275K with the improvements I made. So I can probably net a bit over 100K after closing. 

Monthly payment (including HOA, taxes, insurance) - $1250.

Rental potential - approx $1,300 - $1,350. 

Great location around midtown where a lot of younger professionals live, and people who just move here. Very nice HOA and close to a lot of things.

I am thinking of buying a house in the low 400K. In an area where a lot of professionals live, great school district, an upcoming area because it's new, clean and well maintained, lot of new housing there and shopping/restaurant being built. Traditionally this area have been holding house value much better than other areas. Although it's a more expensive time to buy now, but my equity gain from my townhouse has been parallel with other houses, so to me, this is more of "transferring my equity into a house that's newer, protect my equity better and able  to grow faster" kind of situation. Especially as a primary residence, I don't think it is necessarily to say "it's a bad time to buy because of it's expensive right now"

People talk about crash, to me I don't think crash will happen as in 2008, and in Reno because of the proximity to CA and the fact that it's growing so rapidly, it's hard to think the house market will drop anytime soon (some correction maybe). I don't have enough saving for 20% equity, so selling the condo will not only give me enough cash to put 20% down, so no more PMI on this loan, and have extra money to pay off some debt, and invest.

Though renting it out seems nice, but my thought of against it would be:

* No CF for new house, hence, will need to pay PMI, which would be quite a bit at this loan amount

   * With my condo, to barely break even, seems too risky as any gap/maintenance cost will mean loss (condo is over 40 years old) 

* Opportunity cost - money I could earn and invest (I have investment in stock and eREIT) with the cash flow, the PMI I can avoid to use for something else.

   * Even the area is growing, city is growing, it seems to me this type of townhouse has it's limitation to grow much further, but it can tank quite easily if market is bad, it went as low as $90K in 2011 when I checked the history. 

All that being said, I think it's a smart move to buy and live into a house right now, close to work, much less HOA, will be a new house (new construction with a builder), and can be a starting point if I want to start family in a couple years.

I am 28, still fairly new with investment and RE, is my thinking process right? Please let me know！