Out-of-State rental property in Atlanta

[James Park]

Hello everyone, this is my first post on the forums and I am a newbie RE investor. In June 2006, I purchased my first new construction SFR in Duluth, GA in June of 2006. My wife and I were orginally planning on moving there, but our job situation kept us in Chicago which is our current primary residence. I purchased the home for $550,000 with a $350,000 30 year fixed 6.375. I had made a newbie mistake by refinancing the home to a 5 year interest only ARM in April of 2008, which will last until April 2013. I have wonderful tenant in the house currently who pays me $3000 in rent and which my current mortgage is $1617. My home value has dropped to about $475,000 at this time.

Questions I wanted to ask the professionals:

1) Should i try to refinance the home to a 30 year fixed loan as rates are low? Am i able to refinance into a second home mortgage rate after my tenant's lease expires.

2) If my tenant decides to later purchase the home, can i make this transaction without using a real estate agent to save on the commissions. I do not have a sales license.

3) Should i try to keep this home as long as can until i can break even from the $550,000 price i paid in 2006? or try to unload the home immediately? My tenant has just renewed his lease until February 2011.

4) I've read several real estate investing books that discourage owning out-of-state rental properties. For some of you long term investors, would agree that it is much less of a headache, and more profitable to own rental properties in your backyard?