Seeking Advice on Investment Property Strategy: Cash-Out Refi, Raise Rent, or Sell?

[Jevani P. Barron]

Hi, BP community,

I'm looking for some guidance on how to handle my current investment property. Here's the situation:

I own a tenant-occupied property, which is paid off and cleared. The tenant has lived there for almost 25 years, even before I acquired the property. When I took over, I raised the rent by 15%. However, due to rising insurance and tax costs, I'm starting to feel the financial pinch as the tenant currently pays rent 60% below the market average.

My long-term goal is to acquire more properties, and I've considered doing a cash-out refinance to access equity for reinvestment. However, I'm hesitant because the rent wouldn't cover the new mortgage, putting me net negative monthly. Selling the property has also crossed my mind, but I'm mindful of the tenant's situation.

I plan to raise the rent again by 15% in May when the lease renews, but I'm unsure if that's the best course of action.

So here's my dilemma:

• 1. Given the current rent situation and potential equity, should I sell the property?
• 2. Is a cash-out refinance a good strategy right now despite the risk of a negative cash flow?
• 3. Are there other approaches to balance my goals of reinvesting while being considerate of the long-term tenant?

I'd greatly appreciate any advice or strategies from those who've faced similar situations. Thanks in advance!