HELP.....Keep or unload???

[Trae Floyd]

We own a property that was purchased by my wife before we were married.  We now rent it out for $900 per month.  The tenant approached us regarding purchasing the property.  Our current mortgage is $760 per month.  The property needs about $40,000 in repairs.  If we make the repairs we should be able to take the rent to $1000 per month.  The tenant is willing to purchase the property as is for $100,000.   We currently have $75,000 remaining on the loan with an interest rate of 5.125.  We have looked into refinancing and would be able to refinance down to 3.5% with a mortgage payment of $560.  We are having difficulty determining the cash on cash return since we already own the property.  We would love advice on if we should keep and repair or take the money made on a sale and put it into a different property.