Additionally, I will explore the effects these announcements will have on the local real estate market.

But with regards to OP’s specific question, in addition to what was mentioned above, I think the book would have you think more broadly about the team you would need to compile to make the situation successful (ie realtor, property manager, lender, and contractor [if necessary]).

General inspection we assumed in our costs but the additional inspections/ remediation's we did not.- *I estimated 4% for closing costs on our purchase price of $108,000 but closing costs were closer to 8%.

I would sell it, it's a lot of money with no work.If you rehab it and sell it for 600k you make an additional 60k, is it worth the effort and risk to you?

If so, it seems like it would be easy to be badly in the red before even getting a house under contract (in addition to, obviously, the marketing costs).

If a vacation rental income would surpass the above total, in addition to the avg interest gain her 401k is currently making then I would say go for it.

You will have selling costs and taxes that are not worth selling in such a short time, in addition I assume you are in the game to build wealth, keeping this asset is a fantastic foundation to build on, don’t cash out and start over.

You are getting solid advice here from Edward, Doug and Joe.An additional way to how Joe suggested to receive 'rent credits' , I also like closing costs. 

I appreciate any additional resources and oportunities. 

If the value is there to cash out more than you have into it, then you can balance how much additional cash you want vs. your cash flow comfort level.