As far as I can see this case has never been overturned and the principle still stands. 

This doesn't come anywhere close to the 1% rule (against FMV, in this case) and your Return on Equity (ROE) is terrible--less than 6% probably.I'd take your profits and trade up to a MFR.

@David Roe, I'm not an expert, but my concern would be that this is a VA loan.

Your Return on Equity (ROE) won't be great during the rental period, but it's probably worth it to avoid the capital gains taxes.In the meantime, look into a HELOC so you can use that cash for other investment properties.

Nobody earns 10% on every liquid dollar.I am comfortable with an ROE of 7%. 

In determining when to sell, I think you've got to look at a metric called Return on Equity (ROE).

After accessing the gain from the value add, our investments produce not great ROE if only using the expected cash flow to calculate ROE. 

Return on Equity (ROE) is ~12% (just on cashflow).

I won't do it until I have a better use for the money than my 7% ROE without extra effort and headaches though. 

(Caveat, that may get overturned by politics this year or next, hard to tell for certain.)Bottom line: I’d angle to keep that condo, but leverage it opportunistically for a future acquisition.