Should it stay or should it go?

[Krista Roodzant]

Not sure if this CA property purchased in 2011 is a keeper or if I should 1031 exchange it this summer when the lease is up. Some stats: Purchased for $148,000 and refinanced in 2015 with a cash out that was used to pay off consumer debt (prior to my education in REI!). Currently rented for $1665 to a tenant who has been there for 5 years and pays on time with minimal fuss (self-managed). Owe $200,000 with an appraised value at the time of the refinance of $300,000. I'm assuming the value has gone up a bit since then, but want to be conservative in my numbers.

As I see it I have 3 options:

1)  Do nothing and continue breaking even in regards to cashflow and slowly build up more equity.

2) Try to get a HELOC on it to access the equity. Purchase cash flowing properties in out of state markets where I am currently investing.

3)  Sell it and do a 1031 exchange.

There are pros and cons to each option.  I've been leaning toward the 1031 exchange, but haven't ever done one before and am concerned with the additional costs I haven't even considered.  I would have to put in approximately $15,000 to do some needed updates for it to get top dollar in this neighborhood and am not sure if that is worth it as well.  The thing I keep hearing in my head is the advice from more seasoned investors who regret ever selling a property...

Any and all advice is appreciated!

Krista