Help with a rental property decision making!

[Eddie Lawal]

I am new to REI and still in the early phase of learning (reading books, podcasts etc). I used to live in my rental property for 4yrs before I started renting it out. At the time, I wasn't thinking about REI as a business. Now that I have a different mindset about REI, I was hoping I'd get some advice from you guys.

The house was refinanced for $130K at 2.875% for 15yrs and the monthly mortgage is $1,310 in 2012 with $100K left today. I’m currently renting it out for $1,400, with the intent to increase rent to $1500 next year. However, due to the very little cash flow I was thinking of the following scenarios, in order to still have cash to keep investing:

1. Pay-off the home with $100K cash (which is the current remaining loan balance) and take out another loan of $140K (home valued at $185K – $195K now) for 30yrs with expected interest rate of 4%-6% and use that for investing in other homes.

2. Do nothing.

3. Refinance again- to get better cash flow at interest of 4%-6% for 30yrs.

4. Pay-off the home with $100K cash (which is the current remaining loan balance) and keep collecting rent. At the end of 6yrs the cash investment of $100K will be fully paid off and then, I will be making cash flow of $1,100 ($1,500- $400- taxes).

Please let me know your thoughts. Thanks