help analyzing 'deal'

[Shoshana Shulman]

To answer this question, I think my age (62) should be taken into account, as the benefits might not be as great for someone my age.

I own half a house with another investor. I have the opportunity to buy him out. We've had this house for about 7 years, and have consistently earned, after all expenses, 500 dollars each every month. The cost of the other half of the house is now about 68,000 dollars.

For that investment of 68,000 dollars, I have half of it in cash, and the other half would have to be a loan. I would earn 500 dollars for that half as well, so now I would be earning 1000, after all expenses, instead of 500. 

I like the house. It's a semi in a C+ neighborhood. We completely renovated it seven years ago, so it's in great condition. I have a great manager for it, as I am not local. 

It will probably not significantly increase in value, but the rent should hold pretty steady.

My goal is to increase my 'passive' income so that I can cut myself some slack, and reduce the pressure on me, to be earning X amount at my day job. 

I want the freedom of the possibility to NOT do my day job, if I so choose, within the next year or two. 

On the other hand, buying that half of the house means that ALL my cash is tied up, at least temporarily.

It would take me a few years (two to three) to regain cash reserves. 

Any thoughts?

Any thoughts as to whether or not I should go for this, or keep my cash liquid. I would consider hard money lending, but I need to be 100% sure that my money is guaranteed, and I'm not sure how the taxes, being that that would be considered active income, would be affected.

Thanks in advance for all your responses and help.