When I run my numbers on the actual income and expenses on an SFH, I make sure I account for the increased taxes that are going to occur after purchase, you can call the tax assessor for that property to check or go to the county's website.

But it increased the value of my home by about $150-$200k and I didn’t pay a dime out of pocket for any of the construction.

If the property contains a residential structure, you can make repairs and redemption will include the amount you increased the value of the property with your repairs.

You'll lose your money to turn over, repairs, and increase your risk of getting taking advantage of.

Yes, it's a large sum, but there was a previous all cash offer on the property and Kevin, while he is using a Mortgage, offered a higher Purchase Price and a higher amount for Earnest Money to be deposited on Contract.The Check for the Earnest Money on Contract was made out to the Seller's Attorney Mike as Escrowee, so I am assuming that the Earnest Money had to be deposited into the Escrow of the Seller's Attorney.Kevin then Applied for a Mortgage at a well known Bank.Title was completed and an Appraisal was ordered.Sometime around mid-June 2017, a few weeks later, the Seller's Step-Sister filed a Lien of Rescission to stop the Sale.When the Appraisal came back, the Lien of Rescission was discovered, the Mortgage Bank added the Lien as a condition to clear for closing.A Civil Case was filed against the Seller and the Case was suppose to take place around December 1st.Buyer's Attorney and Seller's Attorney agreed to postpone the original closing from 45 days after signing the Contract on June 13th to December 1st day, documented in email.The Case was then postponed to January 29th, 2018.Along the way, the Buyer's Attorney got sick and developed ALS.When January 29th, 2018 came, the Seller's Civil Case was again postponed to April 1st, 2018.The Mortgage Bank issued a statement that the Mortgage Contingency was no longer valid and has expired.Kevin then changed Attorneys.

Either the amount of renovation won't increase the after renovation value or sellers are asking fair market price without any room to negotiate.

So, I am thinking of couple of strategies.1) To sell and reinvest in other properties, i will have to do a 1031 exchange since it has been about 5 years since it has been my primary residence.2) continue to rent it out and wait for value to increase further.

If the values had increased they might not have needed the second.

Even if market values only increase with the value of inflation (2% compounding), a $185k property should net a $40k gain.I suspect that 25% vacancy is right about break-even for them, assuming the same 8% CapEx and 12% Maintenance and Management costs I used in the other models. 

The below chart shows ALL 20 cities increasing for Nov'17, year over year.