However, capital gains tax will be assessed as the payments are received by the seller, unlike a 1031 exchange, whereby the capital gains tax can be deferred indefinitely for the exchanging individual.

Well one of them wants to leave indefinitely.  

But, the property also had significant positive cash flow....so we didn't mind holding on to it indefinitely.

You can do what is called a section 1031 exchange and defer all taxes indefinitely.

I am a Real Estate Broker with Nottingham Realty Group as well.To answer your question, in definitely depends on the area (as others have pointed out), but what many investors focus on is the monthly ROI.

I left his rent at $900 for the past 2 years, and hope he stays indefinitely.  

I am not sure I will be able to brrr any time soon as the tenant plans to stay indefinitely.  

This system works because you can cash-out refinance this rental property for a permanent, cheap mortgage, with a cash flow, and use the cash to buy the next property, and so on indefinitely.

A 1031 exchange is tax deferred but most investors will do this indefinitely.  

Yup especially in California where evictions are banned indefinitely.