Hold or Sell Dilemma

[Matthew Hice]

I currently rent out my first home which I purchased in 2010 for $81,000. My tenant is on his 4th year in there and no issues. I get $1,350mo and the mortgage, taxes, insurance are $880mo. so cash flow is $470. 

Right now the market in my area is booming and I am pretty confident I could pull $270,000 on a sale of the house. The mortgage balance is only $30,000 and less than $100mo in interest at this point so not much to write off. I have surpassed the ability to do a sec. 121 and avoid capital gains. 

The capitals gains hit would be around $38,000 but I feel like that is the smaller number compared to reinvesting now via 1031 and paying these super inflated prices only to be in the hole later.

I am contemplating selling and holding for a few years or possibly using the sale to pay of my primary homes mortgage which would save me $135,000 in interest. That would allow me to save for more investment properties quickly. 

It would take me over 20yrs to net the amount i could make from the sale in rent. Even after CG tax. 

So should I sell or hold?