Also I am assuming from the title of the post that if you were to sell the property you would be doing a 1031 to defer the taxes?  

This will not qualify for 1031 Exchange treatment under the present structure and "use." 

Here's how each option plays out:Option A: Convert Back to a Rental and Use a 1031 ExchangeIf you re-rent the home for at least one to two years, you can defer capital gains taxes through a 1031 exchange by reinvesting in another investment property.

And the rest of the gain will be deferred in the 1031 exchange.

If this property is hard to rent, or is functionally obsolescent (only 1 bathroom, no yard, etc), or has deferred maintenance that will be costly, or is in a location that is not appealing to Tenants, then maybe a sale would be a good option in favor of a property that has better Tenant appeal, which will likely increase rent and avoid long vacancies in between Tenants.An option to consider....

Quote from @TC Scott: Quote from @Blake McWilliams: Quote from @TC Scott: Have you ever had a buyer present you with a contract asking you for concessions? 

This allows you to use all of the tax and deferred depreciation recapture to purchase the larger MF propertyA consolidation exchange is where you sell multiple investment properties to purchase a larger and nicer investment property, but you also get the benefit of using all of the tax you would have had to pay to your advantage.

If you can rehab and refinance (BRRRR) to extract all investment and achieve neutral cash flow you would have infinite return (most of my RE investments have achieved infinite return but the cash neutral has in particular gotten a lot more challenging when the rates rose starting Q2 of 2022).Any money extracted via a refinance is tax deferred. 

Purchase price: $35,000 Cash invested: $35,000 Sale price: $110,000 Purchased off-market from a tired landlord, this fix-and-flip involved renovating a distressed property with outdated features and deferred maintenance.

Purchase price: $35,000 Cash invested: $35,000 Sale price: $110,000 A fix-and-flip project purchased off-market from a tired landlord involved buying a distressed property with significant deferred maintenance.