Failing property on 15-year mortgage

[Cody Thayer]

Good morning everyone. So I’ll start by saying that I messed up!! I live in Nashville, TN but I bought my first rental property in Memphis, TN a year and some months ago.

My mortgage loan officer recommended a 15-year loan. Being new to this, it sounded good at the time. Estimated rent at the time had me breaking even on the property each month, and I make fairly decent money so I didn’t need the cash flow. The way my MLO pitched it was “put this on a 15 year, since you don’t need the cash flow. That way you’ll have 100% equity in 15 years and you can then bring in 100% cash flow versus just a few hundred dollars.” 

Well, now rent at this property has somehow dropped drastically (from $1,350 a month to now $1,095 per month). The kicker is that my original tenant is out, and now my property management company still cannot get this thing rented… so I’ve paid my mortgage of $1,350 for the past 3 months. But even if it does get rented out at $1,095… I don’t know if it’s worth it. 

So my question is- do I sell this property (valued at $170k and I owe $120k on it), and 1031 exchange it into a new property on a 30-year? Or do I just eat the $300/month once it’s rented and hope that rent goes back up in a year or so?

If you need any other details I’m happy to give them