You need to be clear on what you're trying to determine in order to get clarity on the determination... :)
If I were you, the question I'd be asking myself is:
Is it a better financial decision to hold the current property as a rental or is it a better financial decision to do something else?
In this case, the "something else" is likely going to be selling the property and reinvesting somewhere else. So, let's do this analysis...
You don't give enough information to do a full analysis of your options, but I'm going to make some guesses, and you can tweak the numbers using whatever the real numbers are...
OPTION #1: KEEP THE PROPERTY:
You owe about $300K and are generating about $3850/month in gross income
I'm going to assume your mortgage is 30 years at about 5.5% (the low back in 2004) -- or about $1700/month
I'm going to assume you do your own property management, so your expense ratio is about 40% (long-term, not necessarily any given year)
That means you're monthly NOI is about $3850 * .6 = $2310 and your cash flow is about $2310 - $1700 = $610
That puts your annual cash flow at about $7320
Now, we could use this information to determine any number of ratios (ROI, COC, IRR, ROE, etc), but just sticking with cash flow should work for this analysis.
OPTION #2: SELL THE PROPERTY/ALTERNATE INVESTMENT
EDIT: NOTE THAT I SCREWED UP THIS ANALYSIS...SEE MY REVISION POST BELOW!
Let's see what happens if you sell the property...
You say the property is worth about $600K. After commissions, fees, closing costs, concessions, etc., let's say you'd walk with 90% of that ($540K)
In order to achieve the return you're getting in Option #1, your cash-on-cash return would need to be at least $7320 / $540,000 = 1.35%
So, if you can achieve a better return than 1.35% on the $540K, your best short-term financial option is to sell and use an alternate investment vehicle
I'm not an investing genius, but I'm pretty sure I can think of a few investments that would return more than 1.4% with even less risk than a rental property in DC.
Now, there are some inflection points worth considering as well -- for example, the biggest being that you'll have the loan on the DC property paid off in 20 years. Let's look at that one...
In 20 years, your cash flow increases to about $2300/month (ignoring inflation of expenses/income). That would put your cash flow at about $28,000/year.
Even if your $540,000 sat in a 0% return investment for the next 20 years, you'd still only need to earn about 5% at that point to outpace the rental property with no mortgage payments.
And, if you grew the $540K at about 3% for the next 20 years, you'd have about $1M, so you'd only need to keep growing it at 3% to outpace the $28K annual cash flow.
You can do that with a long-term CD these days...and in a few years, you'll be able to do that with a savings account again.
In other words, unless there are non-financial considerations that you haven't mentioned, I can't imagine a situation where the best financial decision would be to continue to hold the rental property...
Just my $.02 though...