Sell or Refi & Hold?

[Patrick Lindsey]

I'm planning on going to grad school next fall and will be leaving the active duty military. In preparation for this I'm trying to reduce living expenses and debt before I get out in August of 2015. I recently (June) sold a rental I've had for a little over 10 years. I used the proceeds from the sale, savings, a personal loan, and a personal LOC to purchase a foreclosure as a personal residence:

Purchase Price & Rehab: $85,000

ARV: $120,000

Remaining LOC/Loan Amount: ~$29,000

Combined Monthly Payment (w/o insurance & taxes): $625

Monthly Insurance & Taxes: ~$216

My original intent was to sell my previous residence to pay down 10-15K of the 29K I have remaining in loans on my new residence and obtain a HELOC on it to fund flips while I'm in school. Previous residence:

Purchase Price: $169,900

Remaining Loan Amount: $136,275

Terms: 15 year @ 2.75%

Monthly Payment: $1,299

Projected Monthly Rent: $1,200

Here's the question: Should I sell the property and eliminate the 29K in loans/PLOC with the proceeds and my personal income or should I refinance on a 30 yr and keep the property as a rental? I bought the house as a new construction in 2010 (yeah...I don't plan on doing that again) so I **shouldn't** have any major capital expenditures in the next 10 years. Some more about me: I have no other debt, my wife has about 6k remaining on her car payment and another 9k in credit card and personal loan which should be paid off in the next 2-3 months. I also own another SFR free and clear that cash flows about $315 a month after taxes.

Interested to hear others' perspectives...