High Value, Low Cap Rate Property in Appreciating Market

[Christopher Stewart]

I have a property that has appreciated significantly since I bought it 4 years ago. I have lived in it 2+ years and rented it out 1.5 years and I originally thought I might convert it into a second home after I retire (7-10 years from now). But now realize despite an IDEAL location in North Scottsdale it's probably just too big to winter in for 3 months (3500 feet).  Its appreciated 600k in 2 years and now worth 1.7 million. But the cap rate is at 2.8% and being about 24 years old home and its "high end renters" is a continual expense for repairs and upgrades. It has a 300k 3% 30 year mortgage on it. So now I'm considering selling it before the 5 year mark and capture my 250k exemption on the sale. And then take all the profit off the table and reinvest the bulk of back in real estate (leveraged or otherwise) and take a little into the equity markets. I do need some cash flow from the investments for other unrelated projects. What am I missing here as I think through this?