You are not even scooping your initial investment so your cash on cash return is negative.

Purchase price: $565,000 Cash invested: $200,000 Current Price: $599K (originally $649K, 67 days on market).

Positive Cash FlowImmediate cash flow isn’t always possible in growth markets.

Purchase price: $253,000 Cash invested: $130,000 Rural hobby farm on 4 acres.

To Sum it up, its a good idea if you can exceed the cost of capital (higher rate than your cost of debt) with what you earn on your heloc/debt you pull out and invest.The question is how much gains above is enough to substantiate the risk of your variable interest rate, well thats up to your personal investing criteria.

If so, I'd rather just sell it and not deal with the headache of landlording a property like that and just earn some cash.

If they get married it will help her earn SS benefits, etc etc. 

If you are going to be doing the rehab work in exchange for equity then that value needs to be determined up front with a specific timeline that you have to adhere to in order to earn your equity.

So I'd be pulling equity at 9% and only get paid 5% if I used the HELOC and kept the cash in my high yield account. 

The LTR passive losses are reported on Schedule E and are not applicable to W2 income as I am not a real estate professional and earned above a certain threshold.