Deciding to sell rental property to pay of mortgage on home

[rancemulliniks]

First off, i am an idiot. I already know that, so no need to restate facts ;-)  I have attempted to run the numbers in my own spreadsheet, but I cannot visualize the data enough to provide a reasonable model.

I am looking for help with the following.

We have two properties. Both have mortgages and one is used as a rental property and after taxes, expenses etc it yields a very small profit. I am looking to run the numbers to see if it is beneficial to just sell off the rental, invest the earnings while paying off my primary mortgage.

Home 1: $390,000 remaining on mortgage (bi-weekly mortgage payments of $1100, so $2200 a month paid). Home is worth $625,000
Home 2: $170,000 remaining on mortgage (bi-weekly mortgage payments of $910, so $1820 a month). This house is rented for $3000 a month. The house is worth $725,000

I am in my late 30s and looking towards retirement in a 8.25 years (based on my 401k goals and other vanguard investments).

If i sell the rental, I have ~$140000 lump sum to invest after legal/real estate fees and the payoff of mortgage 1. I would likely stuff this back into Vanguard and expect a conservative ~4% return. This also allows me to plow more of my pay cheque, an extra $2200 a month (previous home mortgage expense) into investments for the 8.25 years, since i no longer have a mortgage.

What i don't know how to do is calculate the what-ifs for the rental income over time (and into retirement). Does it make sense to keep it? Is there anything i am missing. Help.

[RWD]

What are your interest rates?

Also: https://forum.mrmoneymustache.com/throw-down-the-gauntlet/dont-payoff-your-mortgage-club/

[SwordGuy]

Home 1: $390,000 remaining on mortgage (bi-weekly mortgage payments of $1100, so $2200 a month paid). Home is worth $625,000
Home 2: $170,000 remaining on mortgage (bi-weekly mortgage payments of $910, so $1820 a month). This house is rented for $3000 a month. The house is worth $725,000

Bi-weekly means every 2 weeks, which means that 2 months out of the year you have 3 payments to make.
Did you mean semi-monthly, i.e., twice a month?

If i sell the rental, I have ~$140000 lump sum to invest after legal/real estate fees and the payoff of mortgage 1.

Huh???   $725,000 - (6% commission * 725,000) - $170,000 = $511,500.   Why do you only think you will have $140,000 after the sale?

I would likely stuff this back into Vanguard and expect a conservative ~4% return.

Why 4%?   S&P 500 should get you 10% nominal, 7% in current dollars.   

When you said you are making a small profit, what did you mean?   Are you aware of how to calculate a true rental profit, or did you just mean, "I collected more rent than the mortgage payment"?