Flip to sell or Flip to hold? | seeking advice

[Easton G.]

I have been stalking the forums for a bit and can't express how appreciative I am for all the info I have gleaned. 

My wife and I have a deal that we would love input on.  

-the condensed version- .We found a house a couple blocks away from our own home in Rio Rancho, New Mexico.  We toured it and placed an offer for $65k.  It was listed at $85k.  The seller (bank owned) accepted.  We have about 40k in rehab costs (septic, kitchen, baths, etc...) none of which scare us.  We really enjoy the process.  I am also projecting $10k in purchase and carry costs. 

In the end, I project we will be in about $120k.  Our Realtor is confident that it can be sold for $160k once rehab'd.  $160k is a pretty conservative number based on comps but it is the number I am using to run calculations. 

The question: should I sell it @ $160k (projecting a gross profit of $20k) OR hold, rent and cash out refi in (x) months?  It would rent for $1200 per month. 

Longterm our goal is to hold property. We just don't have the capital currently to tie up for extended periods of time. I need the cash back out of the investment either through a sale or though a cash out refi @ 65%-75% LTV.

Thanks so much for helping me think through it.