I purchased a SFH for $160k, and had about 40k (cash) in rehab and holding costs bringing my total investment to $200k.

My loan is 150k, which with taxes and insurance equates to $1,550/mo. The tenant pays $2,000/ mo. for all expenses including water and so my only other expense is property management at $200/mo. In essence I make about $250/mo.

The property rented quickly at $2k/mo., and I did this just so I would have money coming in right away. Current rental comps are around $2,300/mo.

Meanwhile although my mortgage is $150k the house is worth around $290k.

So here is what I came up with as my 3 options moving forward with this property as a long-term buy and hold:

1. Refinance now at $200k, pulling all my money out of the house. Benefit: infinite return, can re-use that $40k for another project. Negative: my cash flow would be about $100/mo. and I only have about $5k set aside for emergency repairs. Also note I didn’t fix any of the major systems, hot water heater, furnace, roof, etc when I did the initial $40k of rehab.

2. Wait two years when I can raise the rent to (at least) $2,300/mo., then refinance, giving me a cash flow of around $400/mo. Benefit: Infinite return, it will allow me to set aside more for emergency repairs. Negative: Rates May rise to a point where it wouldn’t be as much cash flow, perhaps even bringing it to $200/mo.

3. Try to pay the $150k off over the next 7 years through accelerated banking (home equity line of credit). Benefits (I would have significant cash flow in 2 years time). Negative: it would take any other cashflow I have and put it towards this investment and therefore I wouldn’t be able to do any other investments.

So what are your thoughts? Do I pull the trigger on a refi now and hope I can get by the next 2 years without any major incidents?

My initial goal is to purchase 1 house every year to the point where I am making as much or more than my W2.