It most likely qualifies for a capital gain exclusion (again, details matter, so this is a preliminary conclusion), but you still owe taxes on all depreciation taken for this unit.Both units will generate some taxes.

Could the money you're losing be generating a better return? 

Thank you @Allan Smith.I wonder how that is generated.

So lets say I set up a lead generation system to find distressed properties, analyzed them, then sent them over to an investor in turn for a finders fee (1% of the values property, so if the home sold for 100,000, the finders fee would be 1,000) That way I could build relationships with investors, build up money to start investing myself, and get my feet wet in the RE world.Again, I could be completely wrong as I still have lots to learn, but I'm eager to start making things happen and I would love to hear your thoughts!

I’m just trying to figure out ideas to generate more income since I have those just sitting idle.

One thing to consider is will boomers downsize more then the previous generation and sooner (of course you always have houses entering market because of deaths).

I already have plans for investing out of my high cost area after purchasing my primary residence so I am not concerned as much that my first property won't be revenue generating right away. 

I've been working on the "next generation" of mobile homes using tiny houses.

My first client bought a 4 unit in Bristol for 280,000 that generated $3,600 a month in rent, right off the MLS.

@Ry Eikleberry $450k will buy you a decent "B" quality fourplex that should generate anywhere from $3,400 to $3,800 per month in gross rents.