you are VERY fortunate to have a father in law to help you out! I think it's time for you to sit down and make a list of the jobs that HAVE to get done rather than the list of things you WANT to get done. The WANTS have to wait. How are the bones of the house? Is the roof in good repair? Is the plumbing functional? Is the wiring safe and up to code? Does the heating and AC work? Whether you stay or decide to sell these are items that NEED to be addressed. Put jobs in the priority that need fixing. An example of this is, if you don't fix a leaking roof you will be dealing with damage to ceilings, carpets, mold etc. A roof fix l can save thousands in the long run. Unless you have issues with a health problem, you can live without central AC.
If the only money owed on the home is a $70,000 loan, chances are you will pay more in monthly rent if you move than if you stay put. You really need to crunch the numbers and get an evaluation of how much you would walk away with if you were to sell your home. A few gallons of paint can make a huge improvement in the overall appearance of any home.
There are many variables in your situation, but contrary to some statements, there "are'" buyers out there . I just put a single family home under contact on Mimosa Dr. in Rio Grande. Granted in this market your property wont get what it did not to long ago but Greg was right " priced aggressively" it will sell.
But that may not be the way you want to go. I would have not only a real estate professional look at your house to give youa current market analysis but also some ideas what should be upgraded or left alont to sell. They could also give you several names and numbers of contractors (lisenced & insured) that can give you estimates as to what the remaining work could cost if you had a contractor do it.
I hope this was of help
One piece of advice I can give is: make a decision fast. Prices there are dropping fast there, if you decide to sell, do it now, and price it aggressively! With the loss of Countrywide, tightening of credit given, and the whole SubPrime market closing there are a lot less qualified buyers than before. You are off-shore in an undesirable area (sorry, but true) with a fixer no less. There are very few buyers for that type of house now. Good Luck.
There are an incredible amount of variables to your situation. Without all the details I couldn't give you an answer. Try talking to a financial professional, perhaps your accountant, and a leading Realtor in your area. Armed with your personal financials and the current market value of your house, then you can make an informed decision.
The answer to your question would depend on the market value of your home. If the value in its current condition is much greater than 70k and you can put some cash and sweat equity in the property to even further increase the value, then that seems logical to me. However, if your financial position does not allow for any more expenses then by all means you should sell. Don't forget you will have to buy something else which may not improve your financial position.
Honestly, there are so many variables and possibilities that I am not sure I can give you a definitive answer.