Preparing to home buy..sell my current condo or rent it out?

[Jamie Farrah]

Hello all and thank you ahead of time for giving me some ideas on this topic!

Being newly married, my wife and I are now looking to purchase a home. We have some money saved but not enough money for the down payment of 20%(to avoid mortgage insurance) on a home that cost $400,000 that we desire.

We currently own two condos, one primary residence, and one vacation rental property. Our primary residence is the one we are thinking about selling. I purchased the condo back in 2011 and paid $95,000, however, I borrowed $30,000 in equity early on to update the property. Anyhow, I now only currently owe $96,500 on it and it is worth now around $230,000. HOA dues are $220/month and my payment is around $950. (15-year mortgage with a low interest rate of 3.25%)

My main question is; Would we benefit from renting this unit out long-term and keep the condo or should I sell the condo and cash out the equity in favor of liquid cash and having a full down payment for the new home?

Some additional background is that the other property(vacation rental) we own also has some built up equity and it typically makes around $20,000/year in rental income after mortgage/HOA/etc.

We have options and do not need to make any rash decisions right away, but I would just like to get the advice and opinions of the community on here. 

Thank you so much again for taking the time to read and respond!