When you're trying to figure out what to do, make sure you look at all 4 of the following factors: cash flow, appreciation, amortization, and depreciation. Your cash flow is ~$ -850/mo, amortization is $1100/mo, appreciation is $13k/yr (assuming your 5%)???, depreciation is (your tax bracket * $10k)/yr. Compare this to the equity you have in your house. Sounds like the equity is ~$27k. So if you add all 4 of those things up, how does that compare to other assets you could invest that $27k in? It's actually not that bad compared to something like bonds or even stocks. But that assumes a rosy 5% appreciation...what happens if appreciation is flat? Also your cash flow is probably a lot worse once you factor in things like vacancy, maintenance, insurance, etc.
