Sell Current Home and Upgrade or Keep as Rental

[Account Closed]

I am new to BP and have stumbled upon it because I was searching for a better way to solve our situation. We have lived in our current home which is in a highly-rated district in Southern California since 2010. Now that our kids are growing, we're thinking of upgrading to a newer and bigger home but to keep the current one as a rental (investment now, then inheritance for our kids later). Our dilemma is, we found a great home but we could not afford to keep both according to our lender: my husband is W2 but I'm self-employed who reported losses last 2 years but can provide bank statements of gross deposits this year. The lender says no to my income. But even if we sell, there are repairs needed to be done and because we wanted to offer asap for the new home, we may only have the option of cash buyers like Redfin.com who valued our home low that after their 7% fee and repairs, we're left with barely even anything for our DP/CC/moving costs. I am hesitant to let go of the current home because rental comps are from 2400 to 2800, enough to cover the mortgage (PITI) of 2100. It is unlikely that we will find a comparable home like this that we can afford as an investment property. How can a small fish like us compete with institutional investors like Redfin who are flushed with cash? What are our options? We want to start investing in rental and growing our assets through RE for our kids.