Your current home is the first home you ever purchased, but you are ready to move up to something a little more "comfortable" and now you wonder, "Should I sell my home or rent it?" Here are some things to consider:
How appealing is your listing? A house that is still stuck in the '70s isn't going to command top dollar in any real estate market. Tenants, on the other hand, can be willing to overlook questionable decor for a good house at a good price. If you don't have money or desire to invest in replacing fixtures that are outdated but work perfectly fine, then converting your home to a rental might be the way to go.
What are they doing to my home? Tenants won't feel the same way about your house as you do. If seeing your former home in less than pristine condition is going to cause angst and restless nights, then you might be better off selling your home.
Money may not be everything, but when it comes to buying a new home and converting the old one to a rental, money is very important. You will need cash for a down payment on your new home, income (rental and wages) to make two mortgage payments, and reserves to cover repairs and improvements for both homes.
The first step in the money equation is to talk to a real estate agent and figure out how much the house you want to buy is going to cost and how much equity you have in the house you already own. Once the value of your current home has been determined it is time to figure out how much it might rent for. Without a property manager your best bet is to browse the local property management company websites, classifieds, or Craig's List for similar properties near yours.
Armed with all these numbers you are now ready to talk to your mortgage lender. If the numbers the lender gives back to you suggest that keeping your current home as a rental is going to prevent you from qualifying for a loan for a new home then selling your current home is probably a wise move.
Talk to your tax preparer. Know the benefits and drawbacks of converting a home to a rental. If the tax implications of owning a rental meet with your approval then it is likely a good idea to convert your home to a rental.
Have a plan for property management. You made it this far. Now is NOT the time to think the rental will take care of itself. It won't. Do you have enough time? Do you understand or are you willing to learn local landlord/tenant laws? Are you tough enough to evict a tenant who isn't paying rent? Did you Google "What you need to know about becoming a landlord" and read stories about both the good and bad of being a landlord?