Hold non cash flowing property or sell for profit now?

[Lewis Chaloner]

I currently own a home in San Diego that I bought in 2015 with 0% down for about $500k. I moved at the start of 2020 and have rented it since. PITI is $2750. Rent is $3000 and the tenants will leave in June (inside my 2 year tax free window, and I don't ever plan to return to this property as I have another home with ADU in San Diego). I expect the home will sell for somewhere in the low to mid 700s, lets call it 725k. I owe 455k. Cost to sell will be 7ish% so I will have a large win If I sell now.

But.  I put 0% down, I have less than 15k in the house in 6 years.  It has some mx coming due in the next few years, probably a roof and some work on the garage.  I make enough to pay for this and my currently debt pay down is about 9k a year at 3.5%.

I'm sure most people would say sell this property as it isn't a cash flowing property. Take the win and invest in a better performing asset. However, I think there is a case to be made for keeping the property, continuing to pay down the debt and 1031 into a dream property in 10 years time when I expect to leave San Diego. I will have to pay CAPEX but the taxes on the property are (ALMOST) fixed and it is certainly hold-able, I am also able to depreciate it etc etc etc. I can also delay selling and purchasing fees and still believe in a long term hold strategy.

Does anyone have any feedback or thought or does everyone suggest selling?  Does this change with the possibility of higher inflation?

Long story short.

Sell for a large win in June/July or hold for another 8-10 years as a marginal property and rely on debt pay down and possibly inflation to help a decade later.