Refinance options on Rental Property

[Imran Raz]

Hello guys,

 I am in bit of a bother and cannot decide what to do. Here is the situation.

I have a rental property which used to be my primary residence, I bought this property back in 2006 when prices in my area were the highest. Since the crash, this property still did not recover, I also made a mistake back then and got myself tied into ARM mortgage for 10 years which turns into 20 years mortgage after 10 years and interest rate is variable depending on Libor rates, currently it is at 3.5%.

I have this property for rent collecting $1950/ month which was pretty good until recently when my payment went up to $2009/month including principle and interest. Every month I have to pay from my pocket to cover the mortgage. 

What are my options?

I cannot refinance because property value is still lower than the mortgage I owe on it.

If I sell, I'll have to bring money to cover the selling cost plus whatever the difference between selling price and the mortgage I owe

Here are more facts:

Purchase price: $310,000
Currently Owed: $230,000
Monthly Payment: $2009
Rent: $1950

I would love to hear from pros in here, what would you do?