sell or hold-rent primary residence

[Grant Hibbert]

I'm looking to move into a new home in which I can rent out the basement - but trying to decide what to do with my current home. My current home has appreciated a bit since I bought it 3 years ago and other houses in the neighborhood are selling quickly at full price. Looking for advice on what to do:

Option 1 - Sell 

If I sell, it would make ~$40-60k. I'd use that money to pay off car loans and put a down payment on another home. My plan is to buy a bigger home and rent out the basement. I'd use whatever is leftover to fix the new home. The money "saved" on no more car payments and a reduced mortgage payment I'd put toward a downpayment for another rental property. I would not need to pull from savings to execute this plan. 

Option 2 - Rent 

If I hold and rent my current house, it would cashflow about $100/month. 

$1,300 rent (I know what rent rates are in my neighborhood)

- $900 mortgage 

= $400 cashflow

- $130 for property management (10% of rent)

- $170 for CapEx account (to make math easy)

= $100 extra cash flow

I would use what I have in saving for a minimum down payment on a home in which I could rent out the basement. This would deplete my current savings until the cashflow from rental and "savings" from reduced mortgage payment regenerated savings account (would still have 3-6 months emergency cash of course). I'd still have car loans but would pay those off at a faster rate with rental cash flow and reduced mortgage payment from renting out basement. 

What would you suggest I do? Any advice is appreciated!