Rental property not meeting 1% rule

[Mary Schr]

Hi,

Three years ago I bought a two family home in an up and coming part of queens, ny.  The original plan was to live in the two bedroom unit and rent out the one bedroom but circumstances prevailed and I had to rent out both units.  The rents from the units is about .5% of the purchase price; cash flow is almost nothing: the rents cover the mortgage and tax and insurance and that’s about it.  I’ve had to dip into my own funds to do repairs.  

I didn’t know anything about investing in real estate so the fact that the numbers aren’t good is a rookie mistake.  I’m tempted to sell it off but everyone is always telling me that real estate in this part of queens (east Elmhurst/Jackson heights) will get more valuable and I should just hold onto it...I don’t have capital to make improvements or make it bigger.  The only thing that might make the numbers nice is if I somehow constructed a third story apartment but that just sounds insane...

I dunno what to do...

The numbers are:

Purchase: 870,000

Two bedroom apt rent: $2325

One bedroom apt rent: $1835