Real Estate Strategy: To sell or not to sell my primary house?

[Gustavo Gonzalez]

Hi All! 

I'm going to describe my scenario in general terms for the sake of simplicity - here it goes!

My wife and I are currently living in a house that we enjoy very much.  The house was purchased May 2014 and the mortgage balance is $800,000 - thankfully houses in our area have appreciated nicely and we can probably sell the house for $1,250,000 for a profit of $450,000 (now this is an inflated profit considering the purchase price was $912,000 and we spent $150,000 in remodeling).

Prior to getting married in 7/2012 my wife purchased a property that she has been renting for the last 4 years.  That rental income has mostly just covered the mortgage.   The mortgage balance for the property is approximately $312,000.  Her tenants will be vacating the property this month so then I had the idea to consider the following.  What if we were to sell the house we live in and then use that profit to pay off the outstanding mortgage of her rental property?

I mostly see this as a win-win but just wondering what anyone else may think?  We are fairly good at saving money so my intention would be to save the money we normally pay for our current mortgage - $5000 for 2 years then go out and purchase another primary residence for us.  In the meantime we would have lived in her rental property "mortgage free" and once we move out we can rent that property which generates $2500 of monthly rent. 

Thoughts?

Best,

Gus