.: Why would you throw another $800k into a market that you're bleeding money in?

Happy to throw you a bone if you need some advice. 

In contrast, in nonjudicial states the processes a couple of months and very cheap.

There has been some hesitation for me to sell due to the fact the rental market here is averaging $2,500 in rent for my area and property, I make great money now and have funds to cover vacancy and repairs on the home, but I would like to be able to afford a nice rental for my fiance and I to live in while we save for our primary residence.Shoild I sell and take my profits (60-70k net) and throw into an investment closer to where I will be living or should I rent, cash flow and build equity in the property. 

So, if you buy a SEVERELY distressed property in a cheap market for $20k, invest $20k to rehab the property and it appraises for $80k, you can refinance out $60k (75% LTV) and have MORE money back in your pocket than you started with.

eg if you buy cheap flooring at Home Depot yourself, and have a handyman put it in, it will be less than if you have a GC do everything.do you have a network? 

I owned and sold/rented a few mobile homes, and somehow today I came across mods and am now binge searching all day.I'm out in Cali, and out in the inland empire land is cheap. 

In Iowa, it is quick and cheap. 

LLCs are cheap in New Mexico ($50, plus registered agent fees)2.

Buying a cheap, random property in the midwest just is not going to do anything for you.