Should I sell or turn personal property into a rental?

[Heather Hines]

Good morning,

My husband and I recently purchased a new home a few miles away from our current home.  We are deciding whether to sell our property or to turn it into a rental.  Input from savvy long time investors would be much appreciated!  Here are a few of the salient facts:  

1. Home purchased in 2009 for $145k with $10k put into the house for repairs.  House was rented out and 10k was recaptured after three years.

2. 2012 I moved into the home and put an additional $40k towards renovations. I also refinanced the house to get rid of PMI and 3.125% interest rate.

3. Palmdale, CA market is "hot" right now and our realtor estimates the sale between 301-312k.  Not to mention the property gains tax we will avoid if we sell now.

4. 5 miles away is Northrop Grumman.  My friend who is in upper level management there estimated hiring to ramp up over the next two years  with 3,000-5,000 new good paying jobs.

5. Rental wise, the house will rent out for approximately $1825-$1875.  Our 15 year loan is $1305/month and expires in 2027.  

Additionally, we can also hold now and sell in two years to avoid the tax.  However, this is a gamble and we have put some nice upgrades on the house that might have to be redone before selling again.  

* New ceramic tile throughout downstairs, front and back landscaping, interior paint, granite countertops, new HVAC, new blinds, built in entertainment center.