Refinance, Sale, or Pay Off Mortgage

[Jonathan Small]

I am in a good dilemma.  I am trying to figure out my best course of action.  Feel free to share your thoughts and suggestions.  I appreciate all the additional questions but really want to focus on the game changing scenario questions.

I have a townhouse that I self manage. It is located outside of my primary investing area. $950 rent. 800 Mortgage/taxes/HOA/Insurance. Section 8 Tenant has been in place for 12+ years. I have had to put in less than $500 in maintenance in last 12 years. She keeps the property very well. We exchange 2-3 text a year. She was about to move out at one time because I was increasing the rent $100. I decided to let her stay. I owe 85k on 30yr mortgage, 3% rate. I have about 15yr left. 170 ARV. Market rent is 1200. I have not moved out tenant and tried to get market rent since tenant is extremely low maintenance. I can do a cash out refi and get a 4.5% rate and get about 40k in cash. i would use the cash to reinvest in South Georgia.

My current goals and strategy. I am a long term buy and hold investor. I do a couple flips a year to generate cash reserves. I don't go looking for flips. I am focusing my efforts on building my portfolio in South Georgia. I have been doing a number of deals with partners and also in my own LLC. I have a few good banks in South GA that will give me financing. I am not looking to invest in other areas since I have a great team in South Georgia. I get many of my deals off market from realtors, property managers, and other investors. If this townhouse that was out of my investing area required more that a few hours a month I would get rid of it. However, it does not.

Questions and thoughts going through my mind:

1.  Sale. Get all the equity.  Use funds to invest in South Georgia where I invest long distance.  I have about 30 rentals in South Georgia.   I am looking to add to my portfolio in this area. I have a team in the area that includes property managers, banks, realtors, inspectors, and maintenance company.  I will have to pay taxes on the gains.

2.  Refinance.  Keep the property.  Tenant will likely stay in the property forever and pay off my mortgage.  I will keep self managing.  I really don't have good repair people in the area if a problem comes ups but could figure it out if needed.

3.  Keep the property. Kick tenant out.   Pay to upgrade property so I can get market rent.  I am thinking 10k for flooring and paint.  I don't know what type of tenant I will get.  I may consider getting a property manager and paying the 10% fee.  This will cut into cashflow.  This will keep me on track to paying off the property.

4.  Or do nothing. There are not current problems. Tenant will continue to pay off the loan.  I will continue to use partners and cash flow to fund future deals in South Georgia. 

Thank you for your suggestions and thoughts?