negative cash flow, but not really an investment

[Edward Debbs]

Hi all-

I have a rental in New Jersey which I've rented out steady for 3 years now to the same family.  We actually hadn't intended to rent it out, but we had to move quickly and it was faster than selling it.  

We have a low interest rate on the mortgage, but we net $400 less than we pay on it every month.  

We are interested in eventually buying more properties and renting them out, particularly since we have some experience on this one.

So I've gotten conflicting feedback from others about whether or not something like this is worth it.  One of my friends tells me "that's like handing somebody off the street $400 bucks a month to go live on your dime."  My sentiment is, yeah, kinda not really.  That assumes the house I'm paying off is worth $0.  I figure as long as my rent check covers all taxes and insurance and eats part of my principal every month, I'm still making money.  Plus I depreciate on taxes and get money back that way.

Would I buy this house today as an investment property?  No.  But the issue here is that this is a house we would like to keep for our future use (due to its unique location).  

Is there reason to what I'm saying or do I just pull the plug on this place, save my 400 bucks a month and put it toward a positive cash flow property, then buy a similar house later in life?