Rent to family member or ?

[Scott Tumath]

Here's my situation. I have a 3BR 2B single family rental built in 1976 with the same tenants for 11 years. The property is in need of upgrades ( windows, siding, concrete repairs). The interior is very dated and needs TLC. The tenants ( two guys) are the usual slobs but pay their rent on time every time without fail. I currently have about 140 K in equity in the property in it's present condition with about $630 positive cash flow per month. I discount the rent to the tenants because of the condition of the property. The going rate for a like property in good condition is about $1700 per month and I charge them $1500. 

  I'm 66 years old and am trying to at least semi retire at this point. My wife is 11 years younger so she will be working another 6 years before she draws S.S. We are open to any kind of creative way to maximize profit and minimize tax burden.  

  Here is another monkey wrench to throw into the mix. My 24 year old daughter has been trying to qualify to buy anything here in Denver/Metro and everything is too expensive. She is renting an apartment with her boyfriend for $1550 per month.

Any suggestions?

Sell my home, get rid of tenants, live in rental for two years and repair it, sell.

Rent to my daughter( I have seen this scenario get ugly), get them to help me repair it...possibly sell to them.

1031 it to a nicer house that I might retire to in the future, rent to my daughter until I retire.

Sell the rental as is, eat the taxes.

Fix the property (20-30K), raise the rent ( probably lose current tenants), cash flow would remain about the same.

Fix and update everything (30-50K) sell, eat taxes, some increase in end profit depending on how much work I do. I am an interior trim contractor.