Should I sell my rental?

[Liwen Gu]

Hi everyone, I know there are tons of forum posts like this on here and I've given advice to a lot of them as well but I find it much easier to give advice to others than to myself :) So I have a rental property in Denver that I bought a couple of years ago and I found out today that the tenant may be interested in buying it. My property manager is also a realtor ran some comps for me and he said I can probably get around 425-430k in as is condition. I'm currently renting it for $1975 (property manager takes $125) a month which is below market rent. My monthly mortgage payment is around $1500 (15 year loan at 3.375%) including tax and insurance. I have a lot of equity in the house; my mortgage is only around 107k so if I sell it I would probably get around 300k in cash or so. Anyway, I'm 95% certain that I want to sell the house and invest something closer to home (in Oregon). I'll probably do a 1031 exchange or something if I find a good deal here (I'm also hoping the tenant is flexible and can wait for me to find a deal here before buying the house) or I can just take the cash and pay some taxes on it and wait for the right deal. I think it's a good opportunity here for me to sell and buy something bigger since the tenant can buy it in its current condition and I can get a discount from the realtor on the commission fees. What do you all think? Any compelling reason for me to keep the rental? 

[Dave Foster]

@Liwen Gu, a tenant purchaser is the gold standard for the success of your 1031 exchange.  

If they want to buy it they will be flexible.  It's your choice really not theirs.  And there's always things you can do like rent abatement or adjustments to purchase price to accommodate your need to find a good replacement property.   They don't have to move.  You have a locked in buyer with no need to spruce up and a flexible buyer who will accommodate your 1031.  It's a win win for all.  

And just looking at your numbers yep it's time to move on.  Denver's been good to you but there's a lot of dead equity.