So, it would then potentially cost you a penalty for early withdrawl and also income tax owed on it.

It's probably unlikely anything too bad would happen excluding natural catastrophes but why take the risk if the profit potential isn't there?

The deals are really so sparse that you can sit and wait and wait and wait for the right deal in a specific neighborhood or you can look at all potential deals across the Metroplex and beyond.  

Quote from @Timothy Newsome: Hello, looking to potentially use a hard money lender in NJ.

I understand Vermont has slightly more stringent regulations to contend with but it would also be closer for us geographically and thus potentially easier to manage.

@Jordan Kaylor, financing aside, how are you going about sourcing potential deals?

I'll also check with the city on any potential liens, I think any inspection would have to be done after my $15k deposit so it would be a high risk, high potential reward type deal, and there is a 15+ bids already.

Now that you have the correct terminology, you can search for lots of potential solutions. 

This property had significant potential for value enhancement due to its location and condition.

you'll be cash flow negative / losing money, potentially for years and years.