Probably.Unless there are extenuating circumstances (eg., rapid appreciation in your area, you want to continuing using it as a primary residence, etc.) then I say sell and reinvest the equity elsewhere.

When estimating, would you add any additional safety factor on top of the original rehab budget just to account for any unforeseen? 

That way, barring any unforeseen concerns, I will know with a strong degree of certainty that Ill get funding approved and secure my earnest money.

@Clint Harris Thanks for explaining the circumstances.

Sometimes longer if there are other unforeseens (town or city providing documents could take longer).

Either way I'd budget some CapEx money away for the unforeseen, probably $150-$200/mo.As to the offer, my understanding is it's $290k firm (which I found out does include all closing costs and the broker's 3% fee).The inside is definitely a converted house. 

That way I am more liquid than I was.Of course individual circumstances differ, and one must consult a Financial Planner/CPA for more tailor made answer. 

Don't forget Rule 2The single best way to not lose money is to have some sort of cash reserves to cover unforeseen expenses.

They do allow you out of the 1 year residency requirement if a circumstance arises that forces you to move, such as a deployment or job change. 

So I just wanted to make sure there was nobody out there that got a potential property denied because of unforeseen guidelines that weren't outlined in writing.