Sell or hold negative cash flow

[Lewis A Martinez]

I never intended to become a landlord.  Bought house new for 300K in 2006 at the height of the real estate boom.  Refinanced in 2012 on a 20 year loan at 4% through HARP.  House now worth 240K.  I now owe about 160K on it.  Began renting it out about a year and a half ago when I moved into my wife's house.  Tenants are now on a month to month tenancy.  Here are the numbers, as best as I can figure them:

Rent:  1395/month

Expenses:

Management 112/month

Landscape  75/month

Vacancy  42/month  (assuming 3% vacancy rate)

Maintenance 248/month (assuming 1% of original purchase price per year--been less than that so far)

Interest: 546/month

Insurance: 106/month

Taxes: 239/month

Principal:  $803/month

So total expenses not counting principal are about 1368, leaving about $27 profit.  Including principal, it's about a $776 negative cash flow.  

My thoughts:  1) If I could be assured of 3-3 and 1/2 percent appreciation, keeping right now seems better than selling and investing the proceeds in a mutual fund.  2) My experience with the real estate crash has left me gun-shy.   And some quick Googling revealed some thought that we are due for a real estate downturn in early 2020.  So from that standpoint selling looks safer.  But I'm curious to see what you all think.  

[Russell Brazil]

Another option is to refinance to a 30 note with that relatively low balance. That might make the numbers work better.