1 deal down. Real estate investing with kids?

[Nate Williams]

My wife and I bought our first property in 2021 for 65k. We spent 30k of our own money rehabbing, lived in the property for 3 years, did most of the work ourselves, and sold last summer for 195k. Obviously, we want to do that again.

My kicker is that we now have a toddler and another kid on the way. We bought a foreclosure and are living in it currently and are making it our forever home due to the location. We are on my income only now due to the kids, and have little to invest at the end of the month. 

We have 40k in the bank and 100k equity in our current house (but we can't afford a larger payment on our current residence). We could make a decent down payment with the 40k, but due to us having little money left over at the end of the month, I'm worried about buying another deal with minimal cash left over after the down payment and not having two mortgages. I'd love to move into another fixer upper for two years so we could flip tax free or live in for long enough to use our FHA loan. However, my wife loves our current house and just isn't down with living in another fixer upper with two small kids (I still have hope of convincing her though!).

How do we get back in the game while minimizing our risks on one income and with two kids?