Ah, the siren song of spreadsheets.....
Having owned a large number of rental homes in the Phoenix market for over 15 years, I will suggest your assumptions are completely unsupported by reality. Expenses have outpaced rental growth by a substantial amount over that time. Put in 4 or 5 percent in that cell and see what happens to your cash flow and ROI. Vacancy and collection loss should be around 8 percent and even if this is a new or near new home, you will incur substantial repair and maintenance expense. You will replace paint and carpet every 5 or 6 years. Water heaters last 8 to 10 years. A/C units last 7 to 10 years, mainly because tenants never change filters. Tenants are very hard on appliances as well. $100 a month is too low.
Use the 50 percent rule if this is an older house. I don't see an HOA expense, so I'm guessing the house is pre-1990's. If you can get $1,200, you must be in a nice area. I assume your wife ran the comps.
I don't see any value increase factored in, and I wouldn't add one. The prices in the Phoenix market have skyrocketed because of interest rates and investor demand. Once interest rates and yields on other investment types increase, property prices will stabilize and could even drop.
Your wife's income is commission based, making it unpredictable and therefore unreliable. I would not count on that for making mortgage payments.
In your shoes, I would be patient. I would refinance this house as an owner-occupied property. With the equity you have, the PMI should disappear and the rete will go down. Then I would aggressively pay off the consumer debt. Having all that debt can be a sign you are living at or slightly above your means. Once I had paid off the cars and the credit card, I would look for a new house nearer to work. I would also accumulate a substantial down payment to avoid FHA hell before I bought.
If you post the location and attributes of the peoperty, a more detailed analysis can be made. In general, I would not pay $185,000 for a property that generates $1,200 in income. Owning one that cost $112,000 can work, and I like buying for owner occupancy and converting to rentals over time as an accumulation strategy.