How do I turn my property cash flow positive?

[Bill Brady]

My wife and I are in the beginning stages of planning our road to wealth via the real estate train...we're hoping to buy our first true investment property within the next month or two under a "buy and hold" strategy. I say "true investment property" because I already have a tenant occupied single family home that was, at first, my primary residence and, as the subject heading implies, I'm losing money on it.

Here are the facts:

I bought the home in Oct 2002 for $123,000 at 100% financing through an FHA loan with a 6.375% interest rate.

I owe right at $100,000 on the mortgage.

Mortgage payment with PITI + PMI = $975 per month.

Tenant pays $895 per month under a 3 year lease-purchase agreement for the asking price of $129,000 (in which, I think he'd be an idiot to buy the house at that time but let's not rule it out). We're only 3 months into the 3 year agreement.

I have a property management group managing the property for me for an 8% fee ($72 per month).

There have been a lot of foreclosures in the neighborhood that have been purchased around the $60k - $70k range and are being rented out for $100 less than mine.

My intention when I moved out was always to sell it, however, with the market the way it was in rural America, that just wasn't an option for me. Now that I'm 10 years into the mortgage, I figure that I should hang on to it for a while longer until at least when the market turns around but I'm trying to find a way to make it cash-flow positive or at least neutral if that's at all positive. I've research all over the place and can't find an answer and am finally turning to the experts.

Any advice?

Does it make sense at all to refinance IF I could with a lower rate?

All help is appreciated!