What will you do with this rental property?

[Lue C.]

Hi everyone,

I'd love to hear your opinion on this one.  What would you do about this rental property if you were me? 

We (my wife and I) bought this 3 bedroom, 1.5 bathrooms single family home at the height of the market for $315K in 2007.  We lived there for 8 years and paid off the mortgage.  We moved out in 2015, and decided to turn it into a rental property.  I screened applicants very carefully, and found a great family as our first tenant.  They signed a one-year lease and renewed one.  The rent is $2000 a month, and I don't really do much as far as managing them.  Because we don't have mortgage on this house, the cash flow is pretty good.  However, the more I learn about real estate investment options, personal finances, and tax strategies, I start to wonder if this is the best return for my money (equity in this case) by holding it as a rental property.  I've come up with the following strategies, and let me know what you think.

Other background information: 

- The house has an estimated market value of $270K as of today.
- With reserve of 10% EACH on vacancy, repair and cap ex, 11% for property management even though I am managing myself,  the cash flow is about $400 a month.
- This is our only rental property.

Strategy #1 -
Keep it as a rental, and continue receive cash flow of $400/month.  We can sell it when it appreciates and do a 1031.

Strategy #2 -
Sell it now, in open market via an agent.  After commission, we probably have $250K cash left. Because we bought it at $315K, I believe it's a capital loss of $65K.  Can I use it to offset my ordinary income?  If you are a CPA or tax export, please jump in!  (Amanda Han's book says it can, if I understand it correctly). Regardless, I will then use $250K to invest in one or more multifamily apartment syndication deals that usually project >15% IRR over 5 to 10 years.

Strategy #3 -
If we don't have a way to unitize the loss if we sell it now, we wait until it appreciates to $315K, sell it, and use the cash (now it's $315K) to invest in syndication deals like strategy #2.

Strategy #4 -
Sell it now to the current tenant who said they were in the market of buying.  It will save me the agent commission of 5-6% ($16K). Use the cash to invest elsewhere.

Strategy #5 -
Sell it to anyone (tenant included) with seller financing. Since we own it free and clear, we can do owner financing.  Get a sizable down payment, which we will invest in syndication deals, and receive monthly "mailbox money" for the remaining balance over 30 years.  I don't have to deal with tenants, nor will I have any more ongoing expenses.  I can even sell the note later if I choose to.  If they default, I get the house back.

Strategy #6 -
Tap into line of credits. Before we moved out, we established a HELOC of $150K. The current rate is 4%, and we have 8 more years to draw. Use $150 K to invest in deals that return more than 4% (again, syndication deals usually has 8% PRR. Dave Van Horn's PPR note fund pays 10%), and the profit will be the difference between the gain and the 4% interest. The interest of HELOC we pay will be tax deductible. We will continue to receive cash flow from the rental.

That's it for me!  What will you do?  Other than these 6 options, what else will you suggest?

Thanks,
Lue