Turns out the contractor was right so now they’re going to have no choice but to replace it.

My choice would be to mortgage and pull out every penny possible or sell and start over if they do not cash flow with full leverage.

@Aaron Wade, thanks for the invite but I unfortunately have a final exam that night!

My realtor Mike Love of Keller Williams has been great but it is my final decision to make.Using @Brandon Turner four square property analysis method I am considering a duplex that rents for $600 per month currently.

Quick update: we made an offer on Fairfield property & the offer is basically dead (at the moment), seller is refusing to drop below $360k ($5k below current ask), so I'll circle back in a few weeks to see if they've decided to finally get with the program and sell (vs getting foreclosed).Came across another very compelling unit, but there are already 6 offers (of which at least 1 is full ask), so not likely to be able to get that one.Working on getting our home on the market (we're delaying till 3rd week in May when our daughter finds out if she will be doing clinical rotations in Philly area hospitals - she's finishing up 2nd year medical school). 

It's the safest way to begin imo and a great choice for your first investment.

As far as the loan, I was considering going with a Military Choice loan from Navy Fed as they do not require any money down and will do 100% financing to include fees.

The house is old as well, with some issues (all 3 furnaces will need to be replaced within 3-5 years).What would be the wisest choice for a first investment?

They will either provide you with a Pre-Occupancy or a Final Occupancy Certificate or both. 

Prices have been increasing since the crash and are finally past what they were and continue to climb.