Pending short sale options

[Troy Cosentino]

Hello all, looking for some advice on what options I might have.

About three months ago I made an offer on a short sale that was accepted by the owner and has been in the short sale approval process since then. The original deadline was Dec 4 but has been extended through the end of the year. 

The property would be a house hack/brrr in North Seattle where I would convert the basement to an ADU (1/1) and live there while renting the remainder of the house (4/2.25). My offer is at 505k, and based on sales in the area I think the value is closer to 650k in its current condition. I'd be putting 5% down for an owner occupied loan and do a lipstick type remodel plus the ADU conversion and target a 750-775k reappraisal.

Somewhere along the way, I was approached by a friend with an opportunity to buy his rental in Spokane (5 hours across the state) off market for a pretty good deal (155k). I partnered with a different friend and have closed on this house and started getting it ready to rent. Going great, just early in the process so far. 

So my question now is what to do about the original house. I have two potential issues that I am thinking about. (1) While definitely doable, money will be tighter than I would like and would likely play into renovation budget and potentially ARV. (2) The timing isn't great. I will still be finishing up the first house when closing on the second, and being across the state makes that a little tougher. Also just in terms of getting started I am jumping in pretty quickly with two houses.

My question then is are those concerns worth powering through, being a little uncomfortable for the year and learning a lot? Or would it be better to slow down by either getting out of the short sale or _____? And what would blank be?