How can I get money out of my investment rental property?

[Holly Sirois]

I have an investment town home that I have on the market but having second thoughts about selling. I have rented it for the past few years at $1250 a month and rents are going up in the area.  I think I can get expenses (including mortgage payment) down to $900/mo.  I have about $40-45,000 equity in the property based on recent sales in neighborhood. If I sell now after expenses, I will probably end up with $30-35,000.   I need to refi if I hold onto it because I have an equity loan of $20,000 that was interest only and has recently jumped to a high interest rate and requires pay down of principal.  Since I was planning to sell, I let it ride a few months. So I  notice that quite a few of these town homes are being purchased by investors.  I have dumped some cash into this place recently (new AC system, wood floors, painted interior exterior, appliances etc). So should I hold onto it?  How can I use the equity to finance another purchase?  Any advice from seasoned pros would be appreciated. I am somewhat new to this.