We purchased a home in South Carolina 3 years back for 138k. We've moved out of state and began renting the house last year for 1200/month. The mortgage balance is $128k. Last year we paid $1k in property tax as a primary residence. This year we should pay closer to $4k. The mortgage payment should increase to $1150/month to cover the property tax increase. For now the management costs are zero. As I understand it, paying a property manager would be around 10% of rent.

Home Value 142k

Mortgage 128k @ 4.5% 30 y fixed, 27 y remaining

Insurance 1.1k/year

Taxes ~4k/year

I assume ~1% maintenance 1.5k/year

Rent is $1200/month

I'd like to determine if it's worth it to pay the loan off early or sell it. Regardless of whether we refinance, we'll pay the the loan off in 15 years or less. So, it seems like the difference is $1600 less in interest / year and a higher obligation to pay (2.6k / year to begin with).

If we leave it alone, we pay $689 in mortgage ($204 in principal), $94 in insurance, $350 in taxes, and $125 in maintenance = $1258 / month = $15096 / year.

With 100% occupancy, we pay $696 / year for $2.5k in principal

With 70% occupancy, we pay $5k / year

With 50% occupancy, we pay $7.9k / year

If we refinance to 15 year 3.29%, we pay $901 in mortgage, all else equal = $1470 / month = $17640 / year

With 100% occupancy, we pay 3.2k / year for 6.7k in principal

With 70% occupancy, we pay 7.5k / year (by year 5, 7.65k in principal paid)

With 50% occupancy, we pay 10.4k / year

Assume the mortgage is completely paid and the house can be sold for 142k. If we assume ~1% maintenance/year (-1.5k), taxes (-4k), insurance (-1.1k), and rent (+14.4k).

At 100% occupancy, we make 7.8k, which is a 5.5% yield.

At 70% occupancy, we make 3.48k, which is a 2.45% yield.

At 50% occupancy, we make 0.6k, which is a 0.4% yield.

I think better returns can be gained by contributing to a stock market index. Though this provides an income outside of the stock market, which is nice. What else should I consider? How can I better analyze this situation?

We've been lucky so far with 100% occupancy, but we are unsure of what occupancy rate to expect in the long term. Do you guys have any guidance there?