Sell the SFR with acreage in a hot neighborhood, or hold it?

[Rob L.]

I’m a newbie with a question.

1. I currently own a house in a hot section of town, a planned neighborhood that city planners have spent years developing. There is a brand-new high school (which is in high demand) and hundreds of new homes in the South Cooper Mountain region of Beaverton, Oregon.
2. I have owned this house for 20 years. It predates all the new construction but is actually within the boundary of the new neighborhood. This SFR is on a small acreage (2 ac) and is ~4000 SF in size. It is unique as all the newer homes are on small (e.g. 4000SF) lots or are condos, townhomes.
   
3. I own house #1 free and clear, no mortgage.
   
4. I purchased a fixer upper in another section of town (near Intel) at a great price a few years ago. It was distressed and needed a whole house renovation.
   
5. I had to borrow 500K from the bank to purchase the fixer upper.
   
6. I put 250K into the fixer-upper and it’s now all updated and looks great.
   
7. Both homes now have about the same market value of ~$1M
   
8. The original plan: move into the fixed-up house for 2 years, rent out the older home in the meantime, and then make a decision - either stay in the fixer-upper, or renovate our old house and then move back. In either event, sell one of the properties. In fact, we've already moved into the fixer-upper. 
   
9. New plan? Now I am looking to change the plans because of the current market conditions and need your advice. Should I rent out my original house and keep it long term? Rental calculator says that it would probably cash flow around $17-20K/year. OR should I sell it now (market is hot), pay off my loans and then invest in something else? OR do you have other ideas or advice? How should I think about capital gains? My overall vision is to create cash-flow sufficient to stop working in 5-10 years. 

Thanks for your thoughts!