If/When to Sell a Solidly Cash Flowing Property

[Max Briggs]

Hello,

I am a fairly new real estate investor in the Cleveland area. Last year I purchased two properties that are performing well, providing roughly 18% CoC return, which I consider to be pretty solid for my first two investments. Despite getting what I consider to be solid performance, I am seriously considering selling the houses at the end of the current leases (both are under two year leases signed in June).  Between the sweat equity from the rehab and market appreciation I have about $50k in equity per house, with each house profiting about $6k per year.     Rent in the area has not come up nearly as fast as prices, so using the equity to refinance and purchase more similar properties is not an option at the moment.  I know that many of the members of Bigger Pockets don't believe in selling rental properties, advocating growing the rental portfolio in almost all situations.  However, when I look at the Net Present Value (NPV) of a property that is profiting $6k per year I get about $60k (assuming an 10% ROR on my alternate investment).  If over the next two years the properties appreciate another $10k (which may be wishful thinking) then I will be right at the $60k equity level that would make it worth selling according to NPV.  Obviously a lot can happen over the next two years and everything could change, so I'm not making any decisions now, but I wanted to throw this scenario out to the forums to get some feedback on whether I'm analyzing this properly.

A more concise and abstract version of my questions is:  Does it make sense to sell a solid cash flowing rental property to take advantage of appreciation (especially if refinancing to buy additional properties is not an option)?