Should we sell or keep our IP?

Hi looking for some advice on what to do or what to consider before selling, here is our current situation:
Purchased an investment property 3 years ago for $650,000. It is a 15 minute drive from where Badgerys creek airport is being constructed in NSW. It’s now 100% offsetting. So paying principal now of $3500 per month. Rental return is $2800 per month. We have had it on the market to sell for roughly 6 months now and have not received any good offers but we’re now considering to sell it for $680,000 which is below what we were expecting. Our home that we live in is paid off so no additional mortgages. Our idea was to free our funds by selling our IP and have the funds readily available in case an opportunity for a bigger family home becomes available, as we are looking to upgrade due to an expanding family.
My question is, would you advise to sell our IP for this price and get out before the market gets worse? Or keep it, pay off the mortgage and have a $2800 per month income and sell later when the property market start picking up again..

 

If you're intending to buy now then it's worth selling your IP. If the lull in the market is also happening in the suburb you're wanting to buy in then you're really not losing out.

 

This lacks an investment strategy. What’s the long term goal?

Here’s another suggestion
1. Keep the IP
2. Take all the funds from the offset and invest it in shares (ETFs or something “safe”)
3. Investment property loan interest is now completely tax deductible
4. Property generates approx 30k a year. Your shares generate about 40k a year. 70k income roughly.
5. You now have 650k of property and 650k of shares growing at inflation (conservative guess).
6. You can now go upgrade ur home and use that 70k of income to pay it down while keeping a 650k tax deductible loan and retaining 1.2million more in assets to grow your net wealth.

Or go buy a big new shiny house debt free and forego 1.2 million in assets that could have paid it off.

 

I like Foxdans proposal as well. Have done something similar. You would have to number crunch to see what the outcome would be financially. 3 years isnt a long time to hold an IP considering the high buy in and sell costs. Of course theres the psychological impact of having your PPOR fully paid off.