Would you sell this rental?

[Brady Grubb]

Good morning BP!

I have a tenant who has been in a property of mine for a little over a year now and they just proposed the idea to me to buy the home. I've always had the mindset of stacking instead of selling so I never actually thought of selling it. Below I will lay out what the property has to offer and some cons I have with it.

2 bed 1 bath cottage at a whopping 675 SQFT

Double lot in an excellent appreciating area (southern Maryland stones throw away to the Chesapeake Bay)

1 year old remodel, everything is new

Public septic, brand new well

Appraised for $335K last year at the completion of rehab. I have around $265K into the property and owe around $210K on a loan.

Rent is currently set at $2095 / month with tenant paying all utilities. Current mortgage is around $1900 a month, refinanced when rates were 7.75% 2 pts.

Pros - 

1. Fresh remodel and relatively low stress ownership 

2. Low cost to entry for my area (avg home sale is $400K+ here) 

3. Excellent renter and would probably stay for more time if I didn't sell it

4. High appreciating area

5. Double lot, option to build another house or a duplex in the future

Cons - 

1. House size, was hard finding a tenant that could accommodate the size

2. Value - due to the small house footprint I do not think this is appreciating at the rate of other homes in the area

3. Rent ceiling - I think ~$2100 will be the top of the mark for a house this size for a while

If I do decide to sell I don't have an active opportunity to throw the equity into but I will be able to find something. I would steer away from the micro houses aim for a 1000+ sqft home moving forward. It would be a relatively easy sale as the tenant knows everything about the house and is already approved. Alternatively, my goal is to keep stacking houses so this goes against the grain of my goal. What would you do?