Question about refinancing

[Jason M.]

Hoping to get some advice/answers.   Trying to figure out if cash flowing positive vs making money "on paper" is better.

I have 3 rentals currently, but the first property we put up as a rental was our first home. We bought it right as the market started on its downslide never thinking it would go down as far as it did. We decided to rent it to see if we could recover some of our losses and hope that the market recovers and prices come back. About a year or so before we moved we refinanced the property to a 15-year mortgage. The current rent covers the mortgage/interest/taxes/insurance but we come out of pocket the HOA fee (it is a townhome) we eat about $350 a month but we are currently clipping about $1000 of principle a month. The property has been rented out for about 5 years and we have been made significant progress on principle. If I were to refinance it now I would have to get an investment loan probably 4.5-4.75% as opposed to my current rate of 3.25%. But I would cash flow about 325-350$ a month instead of putting in 350$ a month.

When I look at the numbers, refinancing cash flows me 350$ a month and pays down the principle about 200 a month.  So "on paper" I lose 500$ a month.  My eventual goal is to buy more properties so my thought was to ride this as long as possible and then 1031 it into something larger like a multifamily.   Any suggestions?   anything I am missing?  coming out of pocket right now isn't the biggest thing in the world and my other two rentals that were more normal deals are cash flowing nicely so I am just trying to figure out what is the best play on this property.