Sale or Refinance First Investment Property
I purchased a primary residence 3 years ago. I decided to move and rent the property. It is a townhome in a small city/town. I financed for 15 years thinking I would pay down principal quicker. Now that I am renting it, I have little to no cash flow and need to decide whether I should 1. Refinance at a longer term with higher interest rate just to cash flow the property. 2. Keep renting it out and let tenants pay down equity. 3. Just sale and investigate different properties. ** Property has rented for 3 years with no vacancy. The units rent very well and I have had good success with tenants. The current Leasee wishes to stay for 2-3 years until she graduate university.
Rent = $750, Payment with HOA, Mortgage, Insurance, Taxes = 725. I have a 15 year at 3.25%. Remaining balance is $50k. I can refinance at 4% for 30 years and change cash flow to 200 positive per month (currently at $25/month). Property is valued $85-90K.
Should I just simply keep paying down mortgage and gaining equity or should I refinance to a higher rate and cash flow? I could always sale as well but I would wait until the current tenant terminates the lease in 1-3 years.