The real estate market is soft right now. It might not be all that easy to sell. If you can easily find another long term tenant, using whatever means you used to get the current one, then I would consider doing that.
If you decide to sell instead fine, it is certainly less headache than having a tenant. I would not then turn around and buy another rental property. You would suffer transaction costs and be no better off. I definitely would not buy a remotely located rental property. Then you are into an expensive management company and you will make no money.
In terms of what to do with the proceeds, I am not sure anyone can advise you intelligently without out knowing your financial situation and the asset classes of the rest of your portfolio.
Lets say for the purposes of discussion that the PV is owned free-and-clear and worth $300K. And lets neglect taxes for a moment. How much of your total investment portfolio does that represent? 1%, 10% 50% ?. If its 1%, then do whatever you feel like.....have fun If its 10% then look for an overall balance between real estate, stocks bonds etc. You do an asset allocation. If its 50%, then you put it in money markets and draw a few percent per year to help with living expenses.
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