A lot of good general advice. My thoughts are that it really depends on what else you hold and what are you doing with your other assets.
Some things to think about for you from what I’ve seen so far:
1) You own a primary already so you will be hedged if housing goes crazy…your existing place will go up too and is a good inflation hedge.
2) You probably won’t want to keep this house considering your current place is nicer so for the wife/kids/etc, you probably won’t want to move back in for the tax free gains so you have a limited time if you want the tax free gain from selling. If you plan to sell later, I’d probably move to sell now since the tax benefit may change and houses are near peak levels right now. It can go higher, but tax free gains may change and it can go down too.
3) It doesn’t sound like you want to be a landlord and most people who keep it probably are more looking to build assets and manage the rental themselves to save on the mostly useless management companies. If you don’t want to deal with a headache, it seems like selling is the less stressful way to go.
4) Your rental is pretty high cost so it’s mostly going to probably turn over annually from families coming and going yearly. That’s sorta a pain to find tenants if the manager isn’t good and as mentioned, with the tax break, someone BUYING your home will save money vs. renting your place. I see a few in my hood where there’s a new tenant every 1-2 years since the rentals are more than buying.
5) You have no mortgage on the home to write off…This makes it so if you got a mortgage, you can have your cake and eat it too. If you sold, got the cash, get another rental with a loan, get some rental income and cash flow, but still have the left over cash to invest/do things with and write off more against your income.
Good luck with your choice…If you invest for income and don’t care if a stock moves a lot, you can do ok too…I have some intc bought for just that reason and get 3.4% yield and oh, the stock is at all time highs too.
At the end, I think the best solution is to look at all your assets/retirement holdings/pensions/real estate, etc…and fill in the hole that is lacking to diversify against anything the guv’ment and tax guys do.
