Is it possible to salvage this deal?

[Michael Ray]

Hi all. Two years ago, I bought a property in the SF Bay Area with the intention of it being a primary residence. With the pandemic, I had some life events that necessitated moving out of state indefinitely, and rather than sell, I decided to rent it out to at least keep the mortgage paid. After management, CapEx, and repairs, I have been going in the hole about $125 a month on the property.

Even though property values have gone up quite a bit, rents in the area are down. I think I am probably charging more than what the place is worth currently, and it still isn't enough. I can probably afford to keep going in the hole if I have to, but if the tenants move out unexpectedly or I need a big repair in the next year or two, I will be in big trouble. Because I only lived in the home for a year, if I decide to sell, I'll have to go through a 1031 exchange.

A few real estate investors and agents I have spoken to have recommended keeping the property because of the long-term potential of Bay Area housing. On the other hand, I have been considering selling it now to get the equity out and investing in a property that I can actually make money on. A cash-out refinance may also be an option, but I am worried about raising the mortgage payment.

I thought I would post here to get some input from the community. Is there a way that makes keeping this house make sense? Or should I cut and run while I still can? Thanks for any advice or insights!