Buy 2nd property or Sell 1st property and start over?

[Tim Vecchioni]

Hello BP! New poster as I have been lurking for awhile now, but after some time researching I feel I am ready to move forward and I would appreciate any advice! I will try to make the backstory quick but if further info is needed, please ask! My wife and I moved into a townhouse 6 years ago. It as a B-/B area. We decided to move a year later but couldn't afford to sell the property so we decided to rent it out. We found a tenant pretty quickly on our own and they stayed for 3 years basically trashing the place. They paid $1,675 / month and our mortgage which I will include the HOA, was $1,650. So we obviously weren't making much money. When they moved out, we rehabbed the house completely with new carpet/paint as it was destroyed. Cost us $6k. Took them to court and only recouped $1,400. We actually found a tenant while the rehab was being done and he's been in there since, being charged $1,725 and is one of the tenants we probably all dream of. Has OCD and takes amazing care of the place. The home was purchased for $220k with a loan amount of $213k. We currently owe around $190k. The comps in the community are selling for $225-230k. The tenant however just yesterday said he has no intention of moving within the next couple years. It's hard to not ride him out as a tenant building more equity right!? We are going to take our personal tax money this year and redo the kitchen/knock a wall down to open it up like other townhouses in the community. Will easily add more value to the house than its cost and we know it will be taken care of. For possible loan information the house we currently live in was purchased at $236k and we owe around $215k with a mortgage payment of $1,530. My question in all of this is that I am itching to get started in finding a property to continue my journey in REI and am trying to figure out my options. In my head, I'm saying to wait this tenant out and then take the equity to use as a down payment on a property that will actually have good cash flow. This could be 2 and a half years from now or even longer pending the tenant. However after reading rich dad, poor dad, I feel I am letting the aspect of the money control me! The second option in my head would be to find a second property and get a hard money lender for the down payment. However I am assuming that a bank would not lend me the additional money for the loan anyways as I already have two in our names. Is this where becoming an LLC is the next step? Should I keep the townhouse and look for property #2? If I do should I sell when the tenant finally does decide to move or should I continue to rent the house after refinancing to a lower mortgage? All thoughts running through my head that need sorting! Any help, suggestions, advice, links is very appreciated as I am here to soak up any information I can gather and advance in my journey! -Tim