We bought our first reasonably priced flat a little over 3 years ago and we're expecting to have the mortgage paid off by this October (there are various reasons why we've decided to do this and not here to start yet another debate about the pros and cons of paying off a mortgage!). Although we originally bought it as a family home, we actually moved to another rental property after a year (again, for reasons that are not relevant to this discussion) and have had a stable tenant in the flat ever since.
We are now looking at taking a mortgage on a second place which we will live in ourselves (by which point we should be mortgage free on the first one). However, we're currently debating whether we should keep the current property, or sell it and reinvest the cash (probably in a combination of index funds and REITs). The current yield (based on the original purchase price) is around 5.4% and the tenant is very stable; however, we'd also expect to make a profit of around 40-45% (excluding fees) if we sold the property (we're in Asia, not the US), which means the yield based on current valuation is only around 3.7ish%.
What are everyone's thoughts on whether we should hold on to a relatively stable return or lock in some profit and reinvest? Thanks in advance!