non-performing rental

[Holly Baldwin]

Hello BiggerPockets community! My husband and I are new investors (just by chance....long story!) and have one SFH rental in the west valley of Phoenix, AZ.

We need some advice from you more experienced investors.

This rental in AZ used to be our home back in 2000-2002. We had to move out of state in 2002, but the house hadn't sold the traditional way. We ended up doing a seller-finance deal not knowing we needed to set timeline saying when the new owners had to find their own financing and not knowing we should have set a higher interest rate (our first big mistakes). Long story short, the new owners owned the home for 10 years (us maintaining the mortgage note the whole time) and then both the husband and the wife ended up passing away.... one in 2008 and the other in a tragic accident in 2012. This is how we ended up the legal owners of the house again.

We live in another state and so we hired a property management company to manage the property. We still had 20 yrs left on our loan, but a higher interest rate, so we decided to streamline our loan just this year and it is now on a 15yr. (our second big mistake)

Problem is, we aren't cash flowing at all. The renters cover the mortgage note and our management fee all but $45. So we are paying $45 out of our pocket every month to have this house. Not to mention repairs, fees, etc. The lease won't be up til March 2014.

Now what do we do?

Do we sell now? After estimating our profits after real estate fees and such, we would make only $5k - $10k off the sale.

Do we hold onto it, waiting so many years to get cash flow?

Do we refinance it back to a 30 yr?

We no longer want to make newbie mistakes. We appreciate any advice you all are willing to give us!

Holly :)