Just starting out after 10 years as a landlord

[Erin Genz]

Hello all,

I have two rental properties in Colorado Springs that were both our primary residence before becoming rentals.  We've had one of the rentals for 10 years and after owning the property for 15 years, the frustration level has outpaced the value to me so I thought I'd toss out a question to the community.  We expect to get about $150k out of the property when we sell.

Do we take the cap gains hit, pay off the mortgage on the second rental ($80k) to increase cash flow on that property and do something else with the remainder (pay down our mortgage, invest, etc.)

or

Do we 1031 exchange into something else?  If we go this route, I would love any insight from others' experiences since we've never actually purchased a property as a rental before. 

We're working toward financial independence so the question really comes down to increased cash flow vs. decreased liabilities.  All opinions welcome!