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.

[Arlen Chou]

@Bruce Lee your post is missing a critical piece of information.  What do you plan to do with the money from the sale of the property?  Your decision path should start from this point.  If you are going to sell and just put the money in a bank account and buy "toys" and travel, you will probably get a certain response from BP.  If you plan to sell and buy another property, you will get a different response.  If you truly need the money for something like medical emergencies or long term care, then you would be looking at a completely different base of replies...  To give you a more detailed answer, it would also help to know where your properties are and the age of your kids.  This is a potentially life changing decision, give us some more info so somebody can give you more thought out answer.

-Arlen