That truly depends on your financial situation and your financial goals. If the rental market is strong in your area and you can afford to buy without selling, then it could be a wise decision. Keep in mind that your townhome may not rent right away and you may have some "down time" between tenants. If this will not affect your ability to make the payments on your larger home, go for it. Also keep in mind that being a landlord can cause a lot of headaches if you do not carefully screen your tenant applicants. After each lease period is up, you may have several thousand dollars of clean up, touch up to do before someone else leases the property. Be sure to get adequate security deposits and check on the unit throughout the lease. Don't wait a year to see how they are taking care of your home. I would also advise getting a home protection package to cover potential repairs such as the A/C, heat, plumbing, etc. (not due to wear and tear).