Refinance or Buy Another Rental: Cashflow is bad

[Jacob Heckford]

I bought my first personal rental in a small community outside of Ruston, La (College Town). This is a solid 2bd/1ba rental that I bought for 70K that appraised for 85k. Everything is great about the house other than the cashflow isn't much. A couple days before I closed on the house I found out that my insurance and taxes where not escrowed into the mortgage and it completely screwed up my analysis on the deal. I made a decision to go through with the purchase with thoughts of refinancing the property at a later date.  

Now that its been 4 months I'm not sure that's the best idea. I am looking at having to pay my mortgage down 20k to lower my note to where I want to be. My thoughts now would to find another deal and make a down payment on that house with the idea of pulling a LOC from the new house to pay down the mortgage of the cash flow issue of my 1st property.

Let me know your thoughts and creative ideas:

Please let me know your thoughts on how you would handle this situation.