I pay about $350 extra on my rental in NW DC, but my equity is paid down $670 in month 1, $673 month 2, $676 month 3 and so on.As I see it, my $350 becomes $670 and more as months go by.
How about your equity vs $400?

HARP 2.0 will let you refi an investment property, even if it is underwater. We are in the middle of doing so right now, and have gotten very favorable terms.

pp here, and I wouldn't worry about updating the property. Ours is not updated, but has a great location, so we price it accordingly and last time we leased it went the same day. Too many overdone rentals sit on the market.

OP, we keep our rental even though we lose $1,200 on it annually (though fluctuates with rental rates) because we get $35K in rent annually. It's a half block to the metro, so we'll keep it in the event our kids will want to live there and will be paid off in 5 years.

Anonymous wrote:I have been renting out a condo in Arlington where I lose $400/month. The value has gone up about 100K- however I would only clear about 25K after capital gains, realtor fees and paying off a HELOC. I can't refinance b/c it's an "investment" property.

Cons: I fear that I will have to put some money into it pretty soon since the appliances are all original (1997) and it needs some updating. I think it would take about 5 years to net zero on the property.

Pros: great for taxes and taking the loss but not sure it's worth it

thoughts?

I assume you are talking about a cash flow loss. Did you look, however, at how much of your principle is getting paid off every month? That's not a loss - that's your net worth increasing. And did you factor in the tax deduction for the depreciation that you would loose if you sold the property? It may not be as bad a proposition as you think.

Anonymous wrote:How much principal do you add every month? If it is much more than $400 you may come out ahead keeping the condo.

I'm amazed that so many people focus on the short term tax implications and not on this. OP, a lot of this depends on your mortgage payment and how much rent you're getting. Yes, you may be paying $400/month + espenses, but if that plus the rent permits you to pay down $1000 in principal each month, it's still not a terrible idea long-term, assumign you don't have a cash-flow problem now. Consider it forced savings.

I suspect OP can't refinance because she doesn't have enough equity, and investment properties have a higher threshold than primary residences.

Are you sure you can't refinance it? Costco Mortgage has some pretty sweet deals going on, and the calculator says the do investment properties.