Renting First Home, Buying Second

[Thomas S.]

Hello,

I am planning for the future and looking for some advice. I bought a small 2 bedroom 1 bath home almost 1 year ago for $55k. I put 3% down on it. My current house payment is $395 and I could rent it for at least $700. I am trying to decide on what to do with it in a couple of years when my wife and I decide to have kids. We make a little over $100k together and have good credit scores. It would be a great rental property and I want to keep it. I am worried that in two or three years I won’t have enough in savings to put 20% down on a bigger home. I got a good deal on this house and similar homes in the area are selling for around $80k. We have made some small upgrades to the property and I plan do more. So my question is should I sell it and use the profits to invest in my next home and hopefully more rentals later on or are there options for loans with less than 20% down payment if you already own one?

Thanks!