Should I sell a Rental House (Best Use of My Capital)

[Mitch Moore]

Hello

I've read some awesome analyses of RE deals on these forums, and hoped some folks might give me their take on my situation, help me understand what my return actually is, what options make the most sense...

I bought a new home last summer as a primary residence (foreclosure - great deal).   I've got a great tenant in my previous home, who I'd initially thought would buy the house after a year, but now seems content to rent for another 2 years or so.   100 year old historic home in a great location.  Moderately restored, but furnace replacement and some roof work could be imminent. 

Purchased home for $120,000 in 2010, invested about $60K in rehab over the years.

Current MV ~ $255,000.

Mortgage liability: $91,000 @ 3.65% (30 year fixed)

HELOC balance: 25,500 @ 5.2% (floating rate)

Paid off $20,000 of HELOC w/ 15 mos 0% interest credit card - current balance is $19,200.

Also owe $46,000 to my 457(b) plan.  $395/month paying 5% interest (to myself).

I mention these liabilities because I used the HELOC and 457b loan to put 20% down on my new home.

House payment is $750/month (incl taxes and insurance);  Receive $1695/month in rent - top dollar for this area.

Because of all the payments on these loans associated with houses, I consider my cash flow about $250 on about $75,000 equity.   Am I thinking about this right?

Because of all the moving parts here, I'm having trouble sorting out what my return is, and whether I should sell the house this coming summer.  Like I said tenants are great, and don't want to move.  Tight housing market with  ~5% appreciation.   I like the idea of just selling it, simplifying my finances, investing in broad market index funds.  But I also like the idea of holding onto a good deal if it is one...

Thanks in advance for any insight ya'll may have!