Househacking is a term coined from @Brandon Turner, and its probably the best idea ever for new investors willing to get ahead instead of falling deeper into a labor paid mortgage/debt with no real return.  

But I had established enough of a relationship with the previous owner that they sent me the deposit separately and asked me to return the deposit.

Anything else and you'll be taken for a ride once your cash is tied up and you are past the point of no-return.

I would just put it all in a spreadsheet and see what your returns look like with each scenario.

@Daniel PattersonDefinitely check out Frank's book like Roy mentioned, but we typically use Cash-On-Cash Return, Cap Rate, and Cashflow after all expenses, renovations, and debt service.

Do you show income on tax returns?  

Then, put your $20k(+) cash into something that WILL get you a better return, at lower interest!

For example, the query "where do I find foreclosure notices in MA" returns lots of links that will be helpful to you in MA

I've made a decent return on the investments, but i'm sure i could have done much better. 

For me I want close to a 25% cash on cash return to put my money in, but there are lots of people that are ok with a lot less (CD's, stock market, savings accounts).