Trying to determine if it makes sense to raise rent

[Peter Stewart]

I am determining what to do with a townhome I own in Inglewood, CA, and would love some input on my situation.

The property has been a rental for me since January 2011 and I've had the same tenant the entire time. She's always been great so I've never raised the rent ($1400). I self manage the property and I moved to IN in 2014, so I'm managing it from a distance. I've been hesitant to raise the rent because I'm pretty sure I'll lose my tenant, and dealing with a vacancy and turnover from afar will be a real pain.

I am pretty confident I can get $1800/mo. MAYBE $2000 if I put some $$ into the place (it's in decent condition, but could use bath/kitchen updates). However, if I turn the unit over I am estimating having to spend at least $15k cleaning the place up (new carpet, paint, misc fixes and updates) if I want to get that rent. Would probably have to spend $60-70k to get the $2000. I'll also have to hire a property management company to rent the place out for me and manage it going forward (so, 10% there).

Here's the math I'm looking at:

Current annual gross rents: $16,800

Projected annual gross rent: $21,600

Management fees (10%): $2,160

Net: $19,440 = $2,640 increased annual revenue

If I am spending $15k, it'll take me ~6 years to make that income back up. Sure, my monthly cash flow will appear to increase by $220/mo, which could increase my purchasing power (a strong positive), but I'm not sure if it's a wise investment. 

One way I look at it is this - spend $15k to make $2640/year, which is a ~17% return. 

But, could I put that $15k into a different property and make more with the $$ long term?

Any other thoughts? Am I missing anything in my analysis?

[John Underwood]

@Peter Stewart Why not do an incremental rent increase (3 to 5%) now and every 12 months to try and hang onto current tenant until you sell and do the 1031?