Rent out or cash out? Bay Area - Good Equity

[Patrick Irish]

I'm debating selling or renting out the townhouse I bought 11 years ago. I'm bay area northern california. Very hot real estate market. 

House is worth at least $790k in todays market. I owe $288,000 and refinancing to 2.625%. I should be able to rent for $3200 and be about $1200 positive a month. Theres $400K+ in equity. Sell or rent it out? Wife and baby just signed up for a 1 year lease in a larger house cause we ran out of room. That's $4200 a month. Renting my place would make that rent more palatable. If I keep it, that's about $400K in positive cash in 30 years plus the house is paid off. If I sell it's $400+k in my pocket BUT not assets and it's not enough to put down on a house around us we want. I think I could make 10% easy a year on that $400K investing plus wife and I still working making money. Any thoughts? Likely sometime I'm not seeing.