You’re in a strong position with multiple viable options.

You aren't necessarily building that much equity (cost of building exceeds the value) but it is a third option that is a hybrid.Another factor is location.

Unfortunately, this reassessment is unavoidable, so you’ll need to evaluate whether transferring the property is worth the potential tax increase.If a Transfer Is Not Feasible:If the potential property tax increase makes the transfer impractical, an alternative option is for your father-in-law to secure a Home Equity Line of Credit (HELOC) on the property.

Alternatively, if anyone has a good deal analyzer spreadsheet for seller financing options or the sub-to strategy, I would be interested in seeing those to incorporate with my existing analysis spreadsheet. 

Also, explore creative financing options like seller financing or private loans to reduce upfront capital needs.

@Lexi Blocksom If the burden of holding the property outweighs the long-term gains, a 1031 exchange allows you to defer all taxes, and you won’t have to recapture depreciation.This option enables you to use the deferred tax benefits to purchase nicer properties in areas with greater growth potential.Once you complete your exchange, you can immediately do a cash-out refinance if you need access to some cash, tax-free.

No, refinancing isn’t an option because of how we purchased the property.

An out of state turnkey option would be easy to do in parallel with this since a true turnkey option should not take much, if any effort other than selecting the right team in a market that can help you reach your goals. 

If you’re hesitant about listing on the MLS due to the slow market and concerns with a traditional realtor, consider off-market options like investor networks, Facebook groups, or BiggerPockets forums where buyers specifically look for properties with income potential. 

The truth is that if you find the right deal, you can make pretty much any market work but if you are looking for consistent deal success that narrows your options down.Some investors look for simple signs like the "Chick-Fil-A" test.