1. Take the tax free gain NOW, before the option is taken away.
2. Buy newer property elsewhere (multi units, or 3-4 SFR)either all cash or 50% down and get $5k+ a month income.
3. Use a good property manager.

Part of the benefit of rentals is depreciation AND doing 1031 exchanges.
Your current cost basis is low. Establish a higher cost basis with the same equity.

I think it’s silly to rent out a $700K house.
You generally get more income (and potential appreciation) from 2x $325K houses.
Do not count/expect any appreciation.

When interest rates go up, it’s going to be harder to qualify for financing.
I think we’re in a bubble inflated by low interest rates.
Most people do not care what they pay for a house, they only care about their monthly payment.
If they cannot qualify for a loan they cannot buy.