Advice for sell vs. hold on rental property in hot market

[Simon C.]

Hi All,

Back in 2013 I purchased a rental property in Denver, Colorado due to not being able to close on anything locally in the San Francisco Bay Area (where I currently reside and still continue to rent). My goal was originally to find a home to use as a primary residence but competition in the Bay Area was just insane and after losing out on a bunch of properties I decided to look out of state for an investment property so that I could at least lock something down and finally diversify into real estate. Now I’m at a juncture where I’m reevaluating what to do with this property and am looking for advice on what the best options are from people who’ve had much more experience than I have.

Details on the property:

2bd/2ba condo (includes 2 garage parking spots) in prime downtown Denver location

Purchase price: $380k

Current value: $550k (approx)

Loan: 30 year @ 3.625%

Remaining loan: $256k (put down 20% originally)

Current rental rate: $2500/mo

HOA: $421/mo

Renovations: $25k spent to date

Property management fee: $0 (currently manage it myself from out of state) - if I do decide to pick up a PM company in the future it'll likely be a 7-8% fee)

Vacancy rate: Not really sure how to calculate this accurately or if there is a general number to use (but I've had about 1.5 months where the unit wasn't rented in the last 5 years)

My original idea was for me to keep this forever and use basically have it cash flow nicely after the mortgage is paid off. To me the cash flow right now isn’t great (could someone reconfirm this for me?) but not terrible I suppose. 

These are what I think my options are:

1. Hold and continue to rent
2. Sell outright (get killed in taxes/commissions/etc) - while I’ll make some money this doesn’t seem like what most RE investors do. Paying taxes sucks and profit will be drastically reduced. However, this may be a good time to make a profit and reinvest/diversify into lower risk investments (T-bills, etc) to protect against a potential down turn.
3. 1031 exchange (but into what? And where?) - timing this will be difficult.
4. Cash out refi/HELOC - does this even make sense with the current higher rates? Doesn't seem like it to me but sounds nice to lock in some equity?
5. Other options?

As mentioned earlier, I currently rent since prices in the Bay Area are stratospheric and buying just doesn’t make sense to me right now. My goal is buy a primary residence but am unable to afford anything at this point and I don’t see any value around here in the Bay Area. So the next goal is to see how to best maximize this investment. I don't have much RE experience and have pretty much just grinded it out for the last 5 years and learned on my own. 

Looking forward to everybody’s opinions and thanks in advance!