Made a novice mistake and wondering what my best options are

[Eli Ettinger]

Clear lake (houston) TX. 2b/2b condo 1000sqft

4% cap. 100% equity.

Purchase price plus all fees plus repairs $90k

Appreciation 5%

Market value $85k-$95k

Currently rented to a good tenant who pays on time with zero issues.

Now that I understand my mistakes and know that I can get much better returns for that amount and could have bought a better deal, What would be a good way out of this situation?

1. sell and move on?

2. get a heloc and invest in another property?

3. buy and hold? 

4. ??

Thank you very much in advance.

[Joe Villeneuve]

OK, let me try this again.

1 - Refi makes it worse.  You could only get 70% of maybe 90k = 56,000 at a cost of around 260-270/month...which would leave you with about 30-40/mo or a max around 500/year in CF.  You would still have 34k in cash left in the deal, which means it will take you almost 70 years to recover it...and start making a profit on the cash flow.  Can you say "grandchildren"?

2 - HELOC isn't any better.

3 - If you did nothing, you will have spent 90k plus, with a CF of 3600/year.  That will only take you 25 years to recover your cash, but you would have 90k of your cash dead in the water.  At least the refi would get you a new 50k+ to reinvest with.

4 - My choice would be to sell it, even if all you walked away with was 70k, and reinvest in in the next deal.  Let the next deal recover the 20k you left behind, and start profits from day one.