Renting out current house, good idea?

[James Gambrell]

We are upgrading to a new house, and our current "starter home" is ideal for renting. Great location, HOA takes care of lawn/snow, house is only 18 years old, has a new roof and water heater. Our real estate agent thinks it's a good rental property. However, going by the 2%/50% rule it looks like a bad investment, so I'm confused. Here are the numbers:

Current value: $195,000

Mortgage balance: $150,000

P&I, taxes, insurance, HOA: $1,050/month

Rental income: $1,600/month + 2% annual increase

Average maintenance spending over 8 years: $100/month

Local appreciation rate: 1.5%, very stable

The location is near a large university and hospital so there is a plentiful supply of responsible tenants (graduate students, residents, etc.).  Even so, I'll assume the usual 1 month vacancy/year.

Calculating rental numbers for the first year.

Annual income: $17,600

Annual expenses: $13,800

Net operating income: $3,800

Value gain: $3,000

Mortgage balance paid: $3,000

Net equity gain: $6,000

Income + equity gain: $9,800

Alternatively, if we sell:

Net from sale: $195,000 - 8% - $150,000 = $29,400

Investment income from $29,400 @ 6% = $1,764

So what do you guys think?  The monthly rent is way below 2% of the value, and the expenses are way over 50% of the rent, and yet my math is telling me I make over 5x more money renting it than selling it + investing the proceeds.  Am I missing something here?