Investment Prop. Cross Roads: Sell, Rent, or Cash Out Refinance?

[Tom Carlson]

Hi - first time poster to Bigger Pockets.  In 2007 I began construction of a new home, but with the financial crisis of 08/09, my existing home value fell by over 40% and I was unable to sell.  My wife and I turned our existing house into a rental property and moved into the new house.  For the past 11 years we've held on to the rental house.  Original purchase price in 2002 was $292,000, and existing value today is $400,000.  Down payment in 2002 was $75,000.  Over the last 11 years, we've been fortunate to have 3 renters, and only 1 month of vacancy during that time.   Current rent is $2,800 per month / $33,600 annually.  In 2015, I refinanced the house into a 15 year loan, with final payment due on June 1, 2029. Today's balance is $120k.  P&I payments are $1,355 per month, making bi-weekly payments.  I pay $1,500 for annual insurance, $6,500 for taxes, and $4,200 for annual maintenance.    

I am 49 years old, and plan on working another 15 years. I like the idea of having good rental income in retirement, thought current rental income isn't really needed due to current income. I am seeking to maximize long-term wealth accumulation, and if I keep the rental, to become a better real estate investor. I found a good SFH Rental Spreadsheet on bigger pockets and have populated it with my information.

Three options I am considering:

1.  Sell to my long-term tenant for $400,000, and invest proceeds in stock market, while avoiding new roof expense in a year or two and taking a gamble on new tenant when current one leaves if I don't sell him the house.

2. Keep as rental, and keep paying down mortgage, with final payoff in 10 years: Current Cash ROI of 4.60% and Total ROI of 23.54%

3. Keep as rental, do a cash out refinance (maybe buy more rental property): With new 30 year mortgage, Cash ROI would jump to 15.58% and Total ROI of 18.61% and just existing rental, not inclusive of other rentals I could buy. I believe I can extract about $180,000 of equity in a cash out refinance, allowing me to buy another $533,000 of real estate.

Any suggestions on how to evaluate these options?  Thank you for reading through this post.