I have one lead on a fairly large house on a large lot in a very desirable area near downtown Yucca Valley.

Home inspections are done once the property is under contract.Also, it's important to know that home inspections for purchase are just to give you an idea on the condition of the property (if you can't decipher this stuff for yourself) so that you can negotiate further if desired...or walk away.

@Roy N. cities in southern Ontario wouldnt have double digit cap rate unless you are purchasing century old house in lowly desired part of a small town.

It's an area with some possibilities-but it's not as desirable if you were East to North East a little more. 

The pictures left little to be desired, but the property was actually in better shape than expected as the seller had begun the rehab project and ended up prioritizing several other projects over this one. 

I admire your desire and ambition to build wealth.  

Unless it is in very desirable location and city, I doubt homes will appreciate like before.

It also means less livable space, less storage, and less desirability. 

Putting aside any less desirable  aspects of your note, if it has been performing for over a year I would think it is worth more now than it would be if you refinanced and then tried to sell with little or no payment history on the new note. 

How desirable is the location?