By the time you take out a trad. cash-out refi, you'll be eating a bunch of fees, which will chew into your theoretical 5% arbitrage spread. 

And if so, how do I keep the property cash flowing / in the green? 

Kentucky keeps eating! 

When they do, they are typically covered by insurance and settled outside of court.The odds of a landlord being sued for a large enough amount that it eats up their insurance, the equity in the investment, and their personal assets is almost non-existent.

Appreciate the tag @Jonathan Greene!

We also have pretty high property tax bills (around 2% of the purchase price/property value) that eat into a lot of the rental income. 

Personally I would chalk this up to making a mistake not raising it more the first time...eat the mistake and maybe raise it again in 6-12 months.

Quote from @Jaycee Greene: Quote from @Spencer Blondeaux: Hello all, My name is spencer, me and my wife have worked with other investors for years, now we would like to branch out and do it for our selves.

Quote from @Jonathan Greene: Reach out to @Sean Graham of Maven Cost Seg.

As long as the property is appreciating well I'd sagree with @Jonathan Greene and say you have a very good property.