Sell or Addition in Queens, NY

[Mary Schr]

Hi,

We bought a two family home in East elmhurst, queens, NY two years ago.   We purchased for around 870,000.  However, after purchasing we had a sudden job relocation issue so we had to rent the apartments out.  The upstairs is a two bedroom (rent is $2325 with parking) and the downstairs is a one bedroom (rent is $1830, no parking).  The rents don’t cover the mortgage and we have to pay in about $609 a month for all the expenses.  

I am vacillating between selling the house or somehow making it into an income producing property.  On one hand, I’ve always wanted to have a rental property portfolio and, although I wouldn’t have started off with this one, I’m wondering if I should take the plunge and try to do something.
A friend of mine is an architect and he asked the Department of Buildings if we could add a third story to the building.  My neighbor added a third apartment and she said it was a good decision for her.  I was told it would cost around &150,000 and the house value would increase, not to mention the rental income. Is this a ridiculous pipe dream or an investment worth venturing into?   NYC real estate is insane and it’s hard to find clear answers.

On the other hand, if I sell it, I don’t know if I’d break even or make a profit....

Any thoughts or ideas?