Trying to get my feet wet...

[Ben Meier]

Hey BP members!

I have a primary residence that I financed using a VA loan a few years ago. I'm want to start investing in rental property but don't quite know what to do with my house. I can't rent it while financed (VA rules) and it's not suitable for house hacking.

Its a 3/2 that I bought for 110K. Comps on the same street are roughly 130-140K. I have around 10K in equity paid so far. I haven't had it appraised yet, but I'm guessing there is potentially 20-40K in equity.

This is my first house and my inspector missed a few items, some of which have been corrected. I kick myself daily for not getting it inspected more thoroughly and not doing my own due diligence. I uncovered a multitude of issues (mainly cosmetic) but I have a couple of big ticket maintenance issues remaining - a slab drain leak (not supply) which was recently discovered and the home appears to need slight leveling (door jambs tight, small gap on brick outside). 

The house also needs freshening up (it's a time machine to 1982). I know its easier to do it all at once, but I don't think my wife would appreciate living in a construction zone. The first steps of any plan are often painful but I'm trying to mitigate what I can.

My question is, what's the best way to get started? Pay for repairs with cash, live in it, and cash out refi for a down payment on a rental? Cash out refi for the repairs and rehab and save for rental down payment? Muscle through and pay cash for repairs, rehab, and down payment?

Any advice would be greatly appreciated.