Rental Analysis - help needed

[Brandon H]

Hello everyone. First post here and I need some help. I've got a townhome that my wife and I have lived in for 6 years. We're looking to move up and might like to keep it as a rental. We love it. Originally bought for $132,500, refinanced to 15 years along the way and currently owe $110,500. I could easily sell it for $120,000 and would likely see some resistance around $135,000.

These units fetch $1050/mo in income. Mortgage payment is $1125 including tax (again, 15 yr mortgage). Monthly HOA is $95 (includes maintenance, pool, insurance). Additional insurance would be $40/mo.

$1050/mo income vs. $1260/mo in cash outflow.

There would be about $1000 in taxable income at the end of the year (income - interest expense - depreciation - expenses).

Obviously the downside is about $200 month out of pocket (best case) and taxable income - mostly due to the 15 year mortgage. The upside is that it would gain about $6500 in principal in the first year and more gradually as the years go on. There are 11 years left on the mortgage. It's a great location in a quality neighborhood within minutes of historic downtown Franklin, TN (suburb of Nashville.) There's reason to believe that values will do well in the next few years.

I have the income to cover the monthly expense and have a emergency fund large enough to cover months of vacancy and repairs. This would be aside from a down payment on a new home.

The goal in keeping it would be to create an income stream within a relatively short period of time and to have a fully paid for asset. I'm 30 years old and this would occur around age 41. There's a small emotional attachment to the property.

Do I have a case for keeping it, or should I price it to sell and move on? I'd basically walk away with nothing if I priced it to sell.

Thanks so much. Looking very forward to your thoughts.