In that case, I will first advise you to remove the "I REALLY want this house" emotion from your decision.

New carpet, lawn installation and maintenance, updated lighting fixtures, paint, or maybe even a patio or deck installed are well within my skills if I have the time to do it (which, living in the place, I certainly would).I've got a friend who will be going to med school down there who I plan to live with, so when you factor in $800 or so in rent from him, PITI will come close to what I would be paying to rent a place anyway.Assuming thus far that this sounds like an intelligent plan (and if not, I'm all ears), here is an example of the type of place I would look for:http://www.realtor.com/realestateandhomes-detail/5372-Barstow-St_San-Diego_CA_92117_M20640-37129Basically, it looks like it would be a really nice home if the interior was cleaned up, a green lawn installed in the front and back yards, and on top of it all, it's a place that I would like to live in while I'm fixing it (unlike my rental properties, this is one aspect where emotion will factor into the decision).Also, what is your opinion on properties with a pool?

It seems like tenants insist less if they are dealing with property manager and they are more professional and less emotional.

If you try to handle it you will spend more time and money and you will burn yourself out emotionally .

Emotional control takes a fundamental mind shift.

"Home" conveys emotional attachment.

You learn very quickly that emotions don't belong in the landlord business. 

Once you've figured that out the answer is clear as night and day, what was grey now becomes black and white.Something else to consider is your equity at risk from an asset protection stand point since home equity is not guaranteed, it has no rate of return, is at risk from litigants, and if you dont live in a 100% homestead exemption state like TX or FL then your equity is at risk from creditors too.yes free and clear is great for emotional solace, but there is a reason the devil is in the details.

On the one hand, it seems to me that keeping the property is perhaps the best FINANCIAL solution, but paying off the non-mortgage debt would be very emotionally pleasing.Should we really be speaking in utils lol?

It goes into the unstable and emotional state of mind that many sellers are in, when they decide to work with a wholesaler.