Rent current house or sale for 1031?

[John N.]

Not sure if this is the correct area to ask this question, but want to throw some numbers out to see what's the best direction.

Last year I bought a house, paid $13,000 through the city since it was an abandoned property. I put another $10,000 in repairs and it's worth $40,000 or $600 for rent in the my area. I'm in the process of closing on a foreclosure down my street. Final paperwork should be done in mid Oct. I would like to rent out the current home and live in the new house. I'll have a 15 year mortgage which will be around $550 (with tax and insurance).

I was planning on renting out the 1st house, roughly $100 for tax, $50 for insurance, 10% for property maintenance and throwing in what's left over in reserve to put a new roof on it in 2 years and then sell it when the market (fingers crossed) is a little better and then buy a duplex for better income.

My wife on the other hand wants to sell it and use the money towards a larger down payment on the other house to make the monthly payments less.

From my experience, a person's standard of living is higher when there is extra money each month rather then having a little nest egg (the rental) gaining equity that can be used at a later date. So I feel we will not save more money even when our mortgage payment is less.

You can see which way I'm leaning but I can see her point as well.

Tell me your thought from someone that has been doing this a little longer.

Thanks