should i sell my first SFR?

[Benjamin Rogers]

I'm trying to decide whether to sell the first SFR I bought or to continue to rent it.

Purchased at auction in 2017 for $84,500. I have a tenant paying $1,350/month since I've owned it. Market value $175,000. Other houses in the neighborhood are listed for $1,695/month. I've not pushed the rent since I didn't want turnover and my tenant takes good care of the house. 

My thought is to sell and to reinvest the gains, possibly in an opportunity fund to avoid capital gain taxes. 

Any advice?

[Patrick Smith]

How much is it cash flowing? If it's cash flowing pretty well (and from those 2 numbers it probably is) then maybe consider the BRRRR strategy to use the leverage for another opportunity. Also, it would probably be safe to bring the rents up a bit. You're leaving over $4 grand on the table annually by not adjusting to the market,

[Jaysen Medhurst]

@Benjamin Rogers, without the details I'd say time to consider selling. Sure you can push the rent, but that won't get you to the 1% rule (compared to the home's value, not purchase price). That means your ROE is pretty bad. My back-of-the-envelope math shows a potential ROE of <6% (assumes pushing rent, 50% expense ratio, and 20% down at purchase).

Pull your capital and use a 1031 to get into a MFR that will provide better returns.

[Benjamin Rogers]

@Patrick Smith For asset protection reasons, I put the property in an LLC when I purchased it. That decision has limited my ability to do a cash-out mortgage. The two lenders I've approached don't offer conventional mortgages to LLC's. They want to give me a 5 year ARM, which isn't appealing to me. Thanks for the encouragement to raise rents; that needs to be done.

@Jaysen Medhurst Thanks for mentioning ROE. I'm not accustomed to thinking in those terms. I'm favoring selling and harvesting the equity in this property for other deals.