Should I sell my investment property?

[Justice Staines]

Hello everyone, I’ll get straight to the point.

I purchased the home in 2020 for 220k in Maricopa, AZ ( Suburb of Phoenix) 

Currently owe 211,000 with a 3.3% rate.

Currently renting for 1750 and my mortgage + HOA has me at around 1300 a month.

I have spoken to a few real estate agents and we think we can get 350k for it in todays crazy market. The problem is short term capital gains tax and if I want to do a 1031 exchange, I’d have to find a city that still has affordable homes and I believe will continue to grow.

So I have 3 options

1. Sell the home outright and receive around 72k after short term capital gains, and seller commissions. Then possibly invest into an Index fund and just contribute to it over the next 20 years

2. Do the 1031 exchange, and try to find a home in the Midwest or south where we could get a higher margin between the mortgage and rent.

3. Keep the rental and hope Maricopa, Arizona continues to appreciate although I think we might be headed for a big correction or recession.

Also, I found a townhome in Pensacola Florida for 90k, if I did the 1031 exchange I could buy it outright and then just rent it. Zillow estimates I could rent it for 1000 a month. But who knows.

what are your thoughts? Thanks!!!