I've been in the same situation.
I would encourage you to talk with your CPA regarding the tax consequences not only while it's a rental, and then when you sell it.
There have been significant changes in the IRS rules for non-owner occupied investment property. The principles of appreciation and tax deductions are still valid. In the long term I strongly recommend investment property...buy and hold, not buy and flip.
I became an accidental investor, and at the time had not real clue what we were doing. Please feel free to contact me directly for specific questions.
A few questions to ask yourself:
1. Do you want to or will you buy a home in Dallas? If so, you may find it difficult to buy another home unless you have at least 20% equity in your existing home. Consult a lender for more information.
2. If you rent the house, are you comfortable being a long distance landlord? If you turn the house into a rental, you should intently consider hiring a property management company. And consult your accountant regarding the tax consequences of having a rental property.
3. If you keep the house, to make up a loss of 25% in equity, it could take quite a long time for the market to rebound to be able to sell the house & not take a loss.
Hope this information helps.
HomeSmart Real Estate
How much does owning this home in AZ affect your purchasing power in Dallas?
Do you have equity in AZ you need to buy in Dallas?
Are you suited to be remote landlords?
Do you think you might return to AZ and want this home?
How long are you willing to wait for this market to recover?
An appropriate person to ask would be your accountant. Gather all the figures needed and evaluate which option will be suit you financially.