Keep or Sell... What would you do?

[Jeshua Patrick]

My wife and I have a Town Home that was a primary residence that we decided to rent out last year. We purchased the property in September 2017 for $123k with 20% down and Realtor estimates its current value at $146.5k. Quick analysis indicates this is probably close and may even be low. It is currently rented at $1200/mo plus $60/mo towards water/sewer/trash and pool access. Mortgage is $620/mo plus $250/mo for HOA fees. Hold backs for vacancy (10%), maintenance (5%), cap ex (5%), and property management (12%) make this no better than a break-even deal and likely a slight loser; however, market (Charlotte, NC) is projected to be a top 5 market for price growth for the next 3-5 years. Expected appreciation over the next 5 years is $20-30k.

Tenant is currently late on rent due to a lost check in the mail and a failure to timely replace the check by tenant or the bank. Tenant was on an automatic bill pay plan with their bank. I have been accused of receiving the check and losing it by the tenant and tenant has not responded to my offer to set up a different payment option (such as Cozy). A 10-day notice has been served and expires on 2/20/2020. 

My personal back story: My wife has about 30k in loans ($8k/5yrs and $22k/25 yrs) against her 401k that are sucking up about $400/mo and has decided that its now time to change jobs/careers. Additionally we have $26k in credit card debt that is sucking up another $450/mo. I have a 401k that I have re-positioned into a SD 401k with the intent to purchase RE inside and outside my 401k and have been actively building a team and searching for property out of state in a market that makes a lot more sense for us than Charlotte currently. In addition to 401k's we have about $10k in liquid cash and $400/mo in excess cash after all expenses. If my wife changes jobs we have to repay the $30k immediately or eat the taxes and penalty ($12k loss, OUCH). I could take a loan against my 401k, pay off her loan, and wait for her to rollover her 401k to her new employer so she can take a new loan out. This is not ideal as it increases the monthly repayment costs by at least $200/mo and severely limits my ability to move on an investment deal during that period. The other option is to sell the property, repay her 401k loans, and pay off some credit card debt which would free up an additional $600/mo in cash. What would you do?