Market Top - Sell - Hold - Refinance?

[Matthew Malley]

My STR market has appreciated significantly due to Covid and I am trying to evaluate the best way to move forward. I bought a STR in January 2020 for $170k. Since Covid, the area has exploded in STR rentals and home values since it close to several major cities. We did $60k in revenue in the first year and are happy with the monthly cashflow. Our goal was to continue to save to purchase another one in the community, but not at these current market top prices. Since it is more of a vacation area, the prices have sky rocketed (bidding wars,etc) and units identical to mine (townhouses all connected) have been selling around $350k - my realtor thinks we might be able to push it to $400k. I'm a bit torn because these prices are unsustainable, but I don't know what the next move should be. Take the money and wait/go to another area or stick with the cashflow and see the prices come back closer to value.

Any input is appreciated!