Sell or hold rental property

[Bruce Lee]

Sell or hold rental property?

In 2015, I bought a single family home for $685,000 on a 30 year mortgage. It is in the peninsula of the SF Bay Area. I spent one month remodeling it spending a total of $20,000. I have it rented out now for $3500 per month and have great long term tenants. Each year, I calculated I make net $2000 after deducting taxes and insurance. I still owe $500,000 on the loan.

I currently have lived in my current house for the last 3 years and my current house is worth about $850,000. I can sell the rental house for about $860,000.

I understand the best financial way is to move to the rental for at least two years while selling my current house (I am married so I will save some on taxes). Then two years later sell the rental, also saving on the taxes because I have lived there for the 2 of the 5 years.

So my question, I want to see what your guys opinions are with these considerations:

-I have kids and moving is such a hassle

-we love the current house as we have great neighbors and love the location

-I love the security of having two houses, just in case something were to happen, my family still has a place to live

-but also selling the rental house can put some big money into our pockets.

thank you all for your advice.