We're just really trying to minimize the amount of additional capital required out of our own pockets. 

See if one of them would go with you to the property to assess the work and how much it would cost to repair the house and capitalize on the "forced appreciation".Or, you can perform "sweat equity"...doing some of the work yourself if you have some experience with renovating and repairing property.Also, be sure to soak up the free knowledge here. 

We look to rehab all of our properties based on what the local market can support and then hold the property (passive income) or sell the property (generate capital) depending on how we think the property fits in our portfolio best. 

At the closing this investor was in most cases not needing to bring any of his own capital, instead he would get a check for the rehab and more often than not would have some left to put into the next deal. 

How do I treat the long-term capital gain (or loss?)

Will I have to pay an additional capital gain tax? 

Current tax basis is approximately 25%-35% of FMV and the sale would trigger a sizable capital gain. 

I have the cash to purchase this property, but I'm asking the more experienced investors on what they would do to leverage financing from the banks so I don't have to deplete my capital.

Over 48,000 homes were flipped nationally, accounting for just under 7% of total U.S. home purchases.

but we have enough capital right now so we're not in a rush.