Should I pull out or wait to sell? Rehab into rental

[Danny Day]

Here are the details of a deal I just completed. It was a rehab for fix & flip, but ended up not selling for the price I wanted.

Purchase price: $65,000
Repairs: $32,000 (out of pocket due to Fannie 120% clause)

Refinanced into a converted to a 30 yr conventional out of a hard money note.

My current loan amount is $74,400

I got it leased right now for $1,350 per month - and my note is $700 (PITI). I'm cash flowing $650 per month.

I've got the appraisal at $137,000. I had it listed at $137,000 and got no bites. I had one offer at $125,000 and I (foolishly :roll:) declined and didn't even counter.

My options:

1. Keep the cash flow, wait until the lease is almost up and put back on the market. Their lease is up this September

2. Home equity loan? For the $32,000 for repairs plus another $10,000 for myself to reinvest.

I would really like to go with option #2. That would basiclly put my loan amount at / around roughly $116,400.

I think we should still have enough equity in there to sell with closing cost, etc. I also think we should be able to cash flow on the note (based on the 1% rent rule - valued at $135,000).

Your input would be appreiciated.

Thanks

Danny