I have a dilemma I would love some input on and I know you guys give great (and honest!) advice.
I own two rentals and rent the home I live in. Weird, I know. I am an accidental landlord of the two rentals; one is a SFH with a pool, expensive to maintain but a charming cottage on almost 0.5 acre about a 15 minute drive from Downtown Dallas. I have had it rented to the same tenants for about 5 years and they look after it very well, but their rent is way below market, especially since the rental market here has exploded recently. They pay $1675 when the market is closer to $2300. The rent covers my mortgage and escrow on a 15 year note but just about. It's not designed to be a rental house, it just worked out that way.
My second rental is a townhouse in a popular part of town which I have rented for 2 years, have a great tenant who pays right at market and this rental is cash flow positive (again on a 15 year note). I am keeping this rental.
I rent a SFH north of Dallas, with a pool. The rent is reasonable, we love the house, the school district and it's close to family and friends, and bonus, the landlord maintains the pool! I plan to extend another year (there won't be a rent increase) I could happily stay here for a many years.
My question is whether to sell the SFH rental with the pool. It barely cash flows, I just spent about $10K updating the pool, I repaired the roof and did some cosmetic work and it looks great. The lease expires at the end of August and it looks like the market is still going strong. However, I love this house, I lived in it for two years before I rented it out (met a boy.. silly me!) and it's my dream home. It's within walking distance of shops and restaurants and even the lake. Rather than selling it should I hold on to it for another 6 years until my daughter graduates from High School? I can't move back now, the public schools near the rental are bad and my daughter's father and his family (who we all get on really well with) live a mile from us currently. We have a great set up and my daughter is settled. It's also too far to live in the dream house and commute, even if she could stay in her school under her dad's address.
If I sold the rental I could make about $150k after commission. I would have to pay capital gains tax though as my income is too high this year and I haven't lived there for many years. I could buy somewhere close to where I am living now but I don't want to buy here, it's classic suburbia, huge homes, fancy HOAs and cars everywhere. Its fine for us now, but I have no reason to stay once my daughter graduates and I don't think it makes sense to buy knowing I will sell in about 6 years. I don't really like the idea of 3 mortgages on one salary, it's too risky. Two is my limit.
So, do I hold on to a far from ideal, not really cash flowing rental for the next 6 years with the plan of living there after that? Is it worth it to keep hold of my dream home?
Or do I sell this year, make a nice profit, invest in the market and find another dream home in 6 years when I am free from the wretched school systems?
Appreciate your input!