Seattle property - not sure how to evaluate primary turned rental
Hi! Relatively new here, and accidental investment property owner. We bought our first home (primary residence) in 2014 in Seattle (Ballard area for those familiar with the city) We paid $669k for a 4BR/2BA, 2500 Sq Ft home built in 1940. It's walking distance to everything and in a very nice, family friendly area. Has been meticulously maintained; we were only the 3rd owners. We put 10% down ($70k) and have $520k left on the mortgage. Zillow / Redfin + what I've seen in the area it would now sell for $1.05-$1.1M.
Last summer we moved to Nashville to be closer to family and we kept the Seattle house and are renting it out. It rents for $4450 and when you back out lawn care, property management, etc. we cash flow $200/mo which we just add to our mortgage payment. The strategy was to hang on to it for appreciation.
As suggested by many, I've been doing a lot of deal analyses just to get the practice, as we want to purchase a rental property here in Nashville with some other funds we have. My question is - how do you evaluate an investment when you switch from primary to rental? For project costs, would I just include the things we needed to do to prep for rental (some electrical work - $7k) or do I need to include my down payment as well? What about other work we did to the home while we lived there (new windows, siding, etc.)? I'm trying to get an apples to apples comparison to evaluate the options of 1. hanging on to it for X more years 2. selling it and reinvesting (1031, perhaps - we are in the highest tax bracket) here in Nashville. How do you decide when to let go of such a huge, appreciating asset and re-invest it in several smaller properties?