Zero Cash Flow on Rental Property

[Joshua Brooks]

I fell into being a landlord a couple of years ago when a quick job move meant either selling our home or finding a renter. We found renters, and now two years in to them paying down our mortgage, I'm convinced that real estate is a solid investment track. We're now in the process of looking to buy another property to invest in.

Here's my question: this house that we're renting out is worth $300K. We're now down to $190K and 14 years left on the mortgage. We're renting it out for $1875 and our mortgage payment is $1750, so we're making it work (we haven't had a day of vacancy in 2 years - because the market doesn't have enough rental properties). But we're breaking even cash-flow wise when you factor in expenses/repairs/etc. Ideally, we'd be cash flowing, but since we're now paying down the principal about $10K/year (actually our renters are) - it seems like we should keep doing what we're doing (as opposed to selling the property) - and just let our renters keep paying down our mortgage.

I've thought about refinancing the property, but now that it's not our primary residence we wouldn't get as low an interest rate. And our long term plan is to retire when that house is paid for - so I'm a little nervous about taking on a longer mortgage term.

Thoughts?  

joshua