Rental Investment Dilemma

[Cliff Garcia]

Here is the breakdown   I owe 70K on my personal home and took out an equity loan that was 38K   The home should sell for around 150K   Let`s say I walk away with 35K  This allows me to factor in at least a 20% down payment on another property and a good chance of a good cash flow situation

Now, if I keep the house/refinance and roll my equity loan into a conventional, the payment will be roughly 950 (20 year loan at 3%) and the house rents for 1300 a month. After calculating mortgage/expenses (cap ex, vacancy, repair, management fees) I will be about $50 a month cash flow and can go FHA on the next property. I have 17K left from the equity though left to use for down payment. In this situation, I need to a lease agreement/deposit in order to be approved for the loan on the next house UGHHH

Here is the kicker, I have an empty lot attached to the property in which I could possibly build a 300 square foot rental. 

Should I keep the house based on putting something on the lot or just cash out and move on??????  I can really use some feedback right now