Sell Rental Property Headache or get new Tenants?

[Jonathan Kaiser]

Hello all, thank you in advance for your input...

My wife and I own two rental properties in Long Island, NY, one of which has been behind in rent the last several months. We have a good relationship with the tenants and are trying to get them rental assistance money through the state, which has been a never ending waiting game since early September when we put the application in. 

We were lucky enough to pay only $140,000 for the property before the pandemic. The rent on the home is $2,500, my mortgage balance on the property is only $100,000, mortgage payment is around $425 per month. Taxes of $4,300 annually and homeowners insurance are paid separate. I am netting around $20,000 per year, excluding maintenance. In today's market we can probably get $365K to $385K for it. 

Due to NY state laws that are highly favorable to tenants and the moratorium that is in place till next month, which will likely get extended, evicting is a direction that we would like to avoid. We are estimating a 12 to 18 month eviction process. 

The tenants recently said they would be voluntary leaving at the end of January, two weeks later they contacted and stated that they were waiting on some money and wanted to try to get square on the rent. They have also stated that they would cooperate if we put the home on the market. 

Assuming the tenants cooperate with the sale, we are contemplating selling the property at $389,000 to see if we get our number, then using the proceeds for an Air BNB property out of sate or...holding on to the property, obtaining new tenants and eventually do a cash out re-fi or line of credit to purchase another home. We are afraid that if hold on to the property that the market will eventually decrease and we will lose an opportunity to sell in this crazy market. 

What would you do? Please consider our tenant eviction laws in NY before answering. Any info is greatly appreciated.