D-class 4plex in a C-class neighborhood

[Ladd McClain]

Hi! My wife and I are teachers who have been doing the real estate side hustle for 18 years. We're unsophisticated investors (we just heard about Bigger Pockets a couple years ago, LOL). But we have acquired five properties through slow and steady BRRR methods, before we'd even heard of BRRR. Most of our properties are cute downtown A-class properties that we rent as furnished-finders or long term leases. We buy low, I fix them up in my summers and my wife makes them pretty. Now to our dilemma. Our worst performing property is an outlier in our portfolio. It's a 4plex in a C-class neighborhood. We found an owner finance deal in 2006. The neighborhood wasn't great but there was a university nearby and I was hoping for gentrification that really hasn't materialized. In 2017, I approached the note holder about re-financing and he agreed if we would shorten the note to a 15 year term. The rate is 3.2% and we have 10 years remaining on the note. There is $138,000 remaining on the note and the property is roughly valued at $625,000. The rents are low because we haven't been able to keep up on renovations (last one in 2013) and we attract a low-earning/higher maintenance tenant. Confession: We are guilty of some malaise and hopelessness with this property. We're leveraged pretty high on our other properties (HELOCS and cash-out refis) so there's not much money available right now. We don't have a lot of money in reserves as we are paying cash for our kids' to college etc. We're in the Catch 22 of wanting to renovate the interiors in order to raise rents but being short on funds to do so. Current rents are $800/mox4 =$3200. Comparable rents in the neighborhood are $950-$1100/mo. I estimate it would take $60k-$70K to renovate including a new roof. We're not sure if we should give up that 3.2% rate to refi to a rate double that. Also, the idea of continuing to pay this thing off faster has some appeal as I approach retirement in 4-5 years. Not sure if we should power through and try to save the money and do this with cash in two or three years or get creative with financing now, take out a loan? Any feedback is greatly appreciated!