Beginner with rental condo - looking for next deal

[Anthony Varela]

Hi BP,   

This is my first substantial post.   I'm looking for advice and possible ways to navigate through the HOT(!) Portland market as a brand new beginner to investing.   

My wife and I own two properties.   Our primary house, and the condo she purchased in 2007 before we met each other.   Due to the economic crash and the buying trends of 2007, the condo was in bad shape just 20 months ago.   Due to an interest only mortgage that was held on to for quite some time, the principle was not paid down very quickly, and to make matters worse, the property was in pending litigation for defects.   We wanted to sell, or rent and move to more space and start our family.   

Given those circumstances above, it made it hard to sell the condo, no lending to the litigation.  We were able to get a tenant in there with a two-year lease.   The good news is that the litigation is settled, no assessment is planned.  The value of the condo has increased roughly 40% in the last 20 months alone.  

Ideally, we'd like to hold onto it and continue renting, but it does not cash-flow well, just barely covering the mortgage and HOA fees. Plus, the HOA is strict on the owner-occupied ratio and if our renter leaves we are placed on a wait list and will have to float it till our name make it through that list. Not feasible.

So we'd like to sell it around the end of the year (end of lease) or continue for a few months with renter month-by-month till the spring and sell.  Any equity we receive we'd like to roll into another, preferably multi-family complex.   

A few questions I have, since this is the second property now (considered an investment property), is there a need for a 1031 exchange as far as taxes are concerned?  

Any advice to a beginner in Portland who would like to get in on the market and roll current assets into the next move?  What are possible next moves?   Any mentors, or experienced investors out there that have time to discuss?   

Thank you!  

Tony