Two lake lots purchased. Do I rent or sell?

[Daniel Lochen]

I currently live on a lake in a great location. A couple doors down I've managed to purchase another home on a better side of the lake with more square footage for my family.

The way I see it, I have two options...

1.) Keep both houses. Live in the bigger home and rent out the smaller house which would cashflow roughly $300/mo

2.) Sell the smaller lake lot for roughly $175k profit and invest it in other markets.

Things to consider:

Purchased the bigger lot for $600k under contract for deed with 4% interest for a five year period with $30k down

Purchased the small lot for $210k with 3.5% interest with $172k left to pay. Was told I could list it at $350k.

Any input on ways I should be looking at this?

Thanks in advance!

[John Teachout]

MN has a lot of lakes so it seems lakefront property wouldn't be rare. From my experience, waterfront properties are closely tied to the current economy and their prices fluctuate accordingly. If it were me, I'd consider selling and taking the profit to deploy elsewhere. Would you be exempt from capital gains due to occupying it? If so, this would be an additional reason to sell.