House near San Fran: Keep renting, or Like-Kind for a complex?

[James Woods]

About 15 years ago my uncle passed away and left his house in Oakland to my sister and I. Ever since we've been renting out the place with the help of a property management company. There's no mortgage and net annual income varies between $20,000 and $30,000.

I've recently been reading up more on real estate investing and I feel like my capitalization is really low. Am I totally off base or should we be looking for a way to leverage the property value into something more?

I'm looking for growth and I'm currently thinking it'd be great to do something like a 1031 exchange of the property as a down payment on a medium-sized apartment complex.

Other alternatives include splitting up the lot into two separates and building a second house.

Thanks for any advice and let me know your thoughts!