What would YOUR next step be? Mostly newbie needing guidance.

[Robyn R.]

Hi all,
My husband and I are at a bit of a crossroads as to what to do next and I'd love to hear what input you can lend. We currently own 3 SF (4 incl our primary res). We do not have a clear business plan as of yet because we aren't 100% sure which niche we want to focus on for the future.

We've been buy and hold thus far with our properties, but we may try a flip on one of the next ones. That said, we don't have a clear cut strategy thus far.

I've already made some newbie mistakes and I'm now I want to move forward and learn from them. Here's the situation:

We are currently finishing up a remodel on a property that we intend to hold for at least five years due to the crazy appreciation Austin is experiencing. Newbie mistake with this deal is that we were anxious to get into a specific area in austin and after three other deals got snatched out from under us, we jumped into this one without paying enough attention to the numbers so we paid over for it than we should of. I'm not horribly worried though because of the appreciation it will experience. I know, that's speculation, but Austin is seriously off the cuff right now.

The problem is, is that we used all of our cash reserves and took out a 2 year 12% loan for the extra $20k we needed to close the deal. Deal closed, and the 20k loan payment is covered by cash flow from one of our other rentals. I feel kind of stupid, but whats done is done and we'll still have cash flow on all 3 properties.

I also have a big chunk of money to pay the IRS for last years taxes on my everyday business and also cap gain from a property I sold in Houston in 2011. Also, some mistakes made there, and I'm committed to doing better.
So, I went from having fantastic credit, to having no cash reserves and a chunk of debt. Add to that, that my husband got laid off two weeks ago and you can see where I'm at.
I fully admit that we are both not good money managers thus far and that this post has made nay of you cringe, but we are committed to learning from our mistakes!

So, we have some choices to make. Would you:

A.
sell a property ....specifically the one that is on our street which we have realized is a pain in the neck to be so close to tenants.
Mortgage is 166K, resale will be about 260k. Take proceeds, pay cap gains and use the rest to get rid of the tax debt and 20K loan and replenish cash reserve a bit. Basically put us back on level playing field.

B.
do a 1031 exchange to build our equity and just worry about the debt later

C.
continue to rent out all three and just keep hanging on?

D.
sell everything, move to an island somewhere and sell trinkets on the beach and drink a lot of rum:-)

Thank you all in advance for any advice!