Advice - What would you do?

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Hello everyone,

My name is Brian and I need advice. I've been playing tennis in my head about what I should do for the past few months and now I'm even more confused than when I started to think about everything. I would love to hear different opinions/advice just to see if my thinking is somewhat correct.

I'll keep it short and on point:

I own two homes free and clear.

1. My residence in the Phoenix metro area - I bought a short-sale, fixer-upper. I had originally planned to fix it and settle down here, but the quality of homes in this area has really made me think otherwise. In my mind, Phoenix homes are not assets, just future liabilities and money suckers. In 50 years, I think Phoenix will look like a shanty town with all these wood-framed stucco track homes decaying underneath the blazing sun. But, of course, this is just my opinion.

2. My investment property in Baltimore - It's doing well, in a great neighborhood, solidly built (brick), never sits more than a month without a renter. I bought it for $230K, my average rent is around *net $1500.00 a month. I'm not looking to do anything with it, other than expand in this area.

My question is, what do I do with the Phoenix home? Do I sell it outright and expand into other RE opportunities? Do I keep the home, live in it, and leverage it somehow? Do I keep it, rent it out (cap-rates are not that great here), and leverage it?

In my mind, keeping it and leveraging it is just asking for future problems. The house is only 20 years old, but it's already falling apart. I've done a lot to it already, but I see all its future problems staring at me everyday. It still needs an exterior paint job, updated master bathroom, possibly a roof, at least one AC unit replaced, landscaping, and potentially all new windows within a couple years. In order to sell it, all I need to finish is the paint job, bathroom, and landscaping. I could easily walk away with 100K in profit afterwards.

My issue is, if I sell it, I'm going to get hit with a tax bill unless I dump the money into a new home, correct? I've been living in the home for over two years, but that matters little, right? I still need to use the money on a new home.

I guess my question is, can I sell the home, and use the money to finance new rental units without being hit with a tax bill? Or should I not sell it, but leverage it to finance new rental homes?

This is where I'm confused.

I want to use these two homes to start walking my way towards financial freedom, but don't know which path to take. I know I have a pretty solid foundation to build on, but I need advice on how to start building.

Anyhow, any help would be greatly appreciated.

(I'm not looking for a professional consultant so don't bother to solicit me.)

Thanks in advance!