What do I do with my money?

[Chad Trueheart]

Here is my situation:

In 2009 I bought a hurricane damaged house and rebuilt it. It has been a vacation rental since. I put the house on the market Monday so I can free up some money to reinvest.

In May of 2012 I purchased another house (long term rental) using a hard money lender. I am in the process of refinancing the house through a bank.

Here is my question: What do I do with my money?
A: Use the profit from the vacation rental (around 50K) to pay off the house I bought in May. ( there will be a balance left over on my note and it will take 1.5 years for me to own the house free and clear).

B: Take the vacation rental profit and buy another distressed property.

Other information: I can use my hard money lender (very low interest rate) to buy another house and refinance after the rebuild. Cash is a concern of mine, I don't have a lot of money to float home mortgages and rebuilds. I don't want to get in over my head in case something were to happen.

I am leaning towards my first answer. If I can own a house free and clear it will provide me 1300 a month in rent revenue (minus expenses) to reinvest in the near future. With the sell of the vacation rental it will free up my cash that I spend on the note (900 a month). All while I am rebuilding another house using hard money.

Thanks.