Losing Money Fast. Sell Property or Refinance/Cash Out?

[Monique Peterson]

My husband and I rented out our first home a few years ago to a very good tenant thinking it would be good to have as passive income after we retire. Great schools and good neighborhood in Irmo SC. The original loan was $92k. It now has a balance of $64k. The home value is around $130k (Zestimate, so it's little off). We were about to start paying off the house quickly within 2 years so that we can see more cash flow. After reading various pieces of material, I realize that may not be the best way to go to see a better return on investment. If I'm serious about making money in rental properties, than I have to be honest with myself. I'm losing money big time with this one and need a solution. We are renting for $1075 with $929 going to mortgage, taxes, and insurance. Last year, the amount was $821. Monthly tax estimate for escrow is up $100 from 2019. The taxes are high and the interest rate is 5.75%. The cash flow (so I thought) would be $146 for 2020; however, I did not take into consideration other expenses such as vacancy rate, repairs/maintenance and cap ex. I can't seem to wrap my head around the numbers to figure out which way I should go with this property so I'm here seeking advice from successful, experienced investors. Option 1: Sell property and purchase new properties with 20% down payment from equity. The lease is not up until December. Option 2: Keep property. Refinance for lower interest rate (credit is so much better now) and use the cash out option to put 20% down payment on new properties. Option 3: Am I missing an opportunity? How would you handle? By the way, I'm so confused as to how anyone can maintain cash flow with the high property tax increases.