Analyzing an existing/inherited rental property?

[Anjana Vakil]

Disclaimer: I'm a newbie, just learning the ropes here :) Apologies if these are "stupid" questions, but after some fruitless BP searching I have to ask for some help...

I love all the resources on BP for learning how to evaluate a potential investment property before you buy. But does anyone have guidance for how to analyze a rental property that you already possess or have inherited, to determine how much sense it makes to hold on to it, vs. trying to sell it? How similar/different is this kind of analysis to what one would run on a potential investment property?

My family owns a 3-unit rental property, bought decades ago and currently owned free & clear. As far as my generation (who will inherit it eventually) is concerned, no cash has been invested, so the cash-on-cash return would be essentially infinite (right?), and therefore seems like a useless figure. Does it makes any sense to calculate the cap rate based on the original purchase price back in the day (1985)? Or should I be basing it on the most recent tax assessment, estimated market value based on similar properties, ...? Or are there some entirely different number(s) I should be looking at?

Thanks in advance for any advice you guys can give me!