The fact that you were able to rent the property after a full gut renovation indicates a good return on your investment, and refinancing after the rehab was a smart move to recoup your cash and prepare for future deals.One key observation is the challenge of rehab budget overruns.

The house was a hoarder house and needed a large amount of work (Roof including plywood, facia boards, soffit, gutters, underground plumbing, outdoor deck, all windows, doors, flooring, bathrooms, half the sheetrock, retaining walls, etc.)

Yeah we're thinking about sitting and observing for a little bit and instead, work on saving more money for downpayment & cash reserves and paying down our principal for our property in Cambridge, Mass.

Analysis of 136 homes in two DC Metro counties held for 5 years.Genesis of my curiosityAs a Realtor and investor for 10 years I often create my own theories of various market trends based on my own observations, experiences and listening to the anecdotes of others.

They probably don’t want to admit the real story to themselves or their investors.My observation is MF values are down 25% to 37% from peak—I have a case study with a reliable value at the moment of peak and a semi-reliable current value estimate—the drop is 37% and this is not a distressed property. 

The insurance company wants to fulfill its obligations to the insured, and the construction company wants to keeps its employees happy, working and retained while they travel to a job site.

Key Principles:Mindset and Goals:Think Long-Term: Real estate is a long term play in most cases Set Clear Goals: Define your financial goals and how real estate fits into your overall plan.Finding the Right Property:Location, Location, Location: Invest in areas with strong economic fundamentals, good schools, and low crime rates.Cash Flow is King: Look for properties that generate positive cash flow (rental income exceeds expenses).Consider Appreciation: While cash flow is primary, also consider properties in areas with potential for long-term appreciation.Financing:Get Pre-Approved: Get pre-approved for a mortgage before you start looking at properties.Leverage Wisely: Use leverage (debt) to your advantage, but don't overextend yourself.Consider Creative Financing: Explore options like seller financing or partnerships.Building Your Team:Real Estate Agent: Find an experienced agent who specializes in investment properties.Property Manager: Consider hiring a property manager to handle day-to-day operations.Accountant: An accountant can help you with tax planning and financial management.Attorney: Consult an attorney for legal advice and contract reviews.Managing Your Investment:Maintain the Property: Keep your property in good condition to attract and retain quality tenants.Screen Tenants Carefully: Conduct thorough background checks on potential tenants.Review Your Finances Regularly: Track your income and expenses and make adjustments as needed.Example Action Steps:Set Your Goals: Define your financial goals and how real estate will help you achieve them.Educate Yourself: Read books and articles about real estate investing.

While not in TN specifically, I have assisted clients do as you have described: live in a property as a principal residence for 2 years, rent it out for 3 years, then sell.Based on the situation described, you would appear to be eligible for the MFJ joint exclusion on principle residence on your 90% share.However, in order to retain that ability, the house will very likely need to be sold (ie, sale closed, not just under contract) by the end of this month. 

Do you want to bring in an equity partner to fund the house build to rent out and you retain some equity?

Will the lot require a retaining wall?