Maybe.Finally the 6 grand left covers the property tax and insurance with the first month rent or deposit and any other costs without a real estate agent taking more money as ill be the main guy making sure the proper paperwork gets done along with title insurance and the like, then we move in.

The rental market in Houston is strong and I am looking to leverage the equity and grow the portfolio especially in some of the up and coming areas.My main question is about pulling out equity from a property in a high tax area like Houston.

My main concern is my tenants are basically professional system abusers and I wouldn't be surprised if when the constable shows up, they magically have a check with the outstanding rent owed. 

@Najat F Kessler from your description it does sound like the second floor tenants are the main issue here.Are they on a year lease?

The first house was no doubt the biggest hurdle in getting into real estate, but the current dilemma is "now what"?  

We are interested mainly in TurnKey properties, as we are still working full time and are looking for out of state properties.

FYI:  the main unit is listed as a 3/1, but we found that it is really a 2/1 - the 3rd "bedroom" is technically a den and is a walkthrough to the 2nd bedroom upstairs.As we looked at the property late(r) in the evening, we weren't able to view the exterior/roof of the property very well. 

There is asbestos insulation, and rotten sills on both the garage and the main house, and electrical problems (short in the bathroom, no grounds, and not enough AMPS for the house).

We are stumped as to the legal hurdles though, could someone help point us in the right direction with some of the below questions! 

In addition, there are a few main components of the structure to consider: exemption status (506b vs 506c), equity split, preferred return, fees and waterfall hurdles.