Cash Pros: no mortgage, ability to take it all out in refinance, can leverage (finance) House 2 b/c House 1 is all cashCash cons: the cash is temporarily (or permanently) gone, not leveraging the most out of your dollar, if the property doesn't refinance where you think it should - you can't get all your cash backLoan Pro: potential to maximize your leveraging ability, tax incentives, experience in going through the loan processLoan Cons: holding costs/mortgage payment, acquire debt, interest rates rising make it tough to refinance (for the time being)-----Depending on the amount of capital you have, I might recommend the BRRRR strategy.

Just saw a episode of Judge Judy.. similar situation.. and yes,, the insulation needs to come out. you could get additional quotes,  remove brush, trash from exterior, any tree limbs that touch building, get exterminator in to bait and trap. next will be holes thru the ceiling from the rats.. any holes or vantage points on roof they are gaining access from, by A/C unit or vents that are damaged.. they are getting in some how and food source is active enough to keep them. 

@Randa C.

Scott Matthew C.

They are in C- neighborhoods.

@Brian C.

I recently ran across a similar court case where the IRS took issue with this (thought I think the facts are slightly different).If it's a single member LLC, what business activity code would you choose on Schedule C when you report the income?

I'll be going to the meetup that @Steven C.

I own b@c properties and I find new construction to be my best friend.....I also have shook my head at some big multi purchases..

@Rich Hupper it depends on how you file your taxes (if you file as a sole proprietorship, s-corp, c-corp, etc).