Okay, here's the information...
Mortgage - $114,000
Taxes and Insurance - $4000/yr
Rent - $1050/mo.
Net income after mortgage and expenses (assuming just minor repairs - the house is in very good condition and we maintain it well) - $200/mo
Should we keep the home and take the two year lease and plan to sell in two years...hoping for a bit more market recovery? Should we try and just pay off the home and keep it as a rental when we retire because of the constant ability to keep it occupied with renters?
I'm at breakeven if I sell. I'm at very very small return if I rent and that is assuming no major repairs are necessary.
My husband hates going over and fixing things after working all day....BUT, we fixed that about 4 months ago and "hired" a maintenance guy who lives right across the street. He's a friend of ours and charges us only when we call him and he's very fair. He's a licensed electrician and a great handy man. I've actually given him more money because he was charging me so little.
Thoughts?
If I had the answers to these questions then I would've stopped landlording 15 years ago.
You have no compelling reason to sell, even though you're working for peanuts. You don't have any compelling reasons to be a landlord, either.
What you seem to have is a minor hassle, and you're taking more risk than you need to. You have an asset-allocation problem, and now you'll want to figure out what you'd prefer to invest in.
If you decide to keep the property, then the tenant demand seems to indicate that you need to raise the rent. If your equity is rising, too, then perhaps it's worth seeing whether the bank will refinance for a lower rate (even if you restart the length of the mortgage).
If all of this seems like a hassle, though, then it's time to liquidate. When you do that, you're more interested in eliminating the hassles than you are in optimizing the profits.