Flipping to gain capital for buy & hold

[Jeremy Gervasini]

Hi BP,

I was really considering doing an FHA loan on a MFH, occupying one unit and leasing out the other. But the problem is, homes in my price range are in bad areas and most of them are in pretty rough shape. I don't want to bite off more than I can chew right away (living in a bad neighborhood, possibly expensive issues, problematic tenants) since I've never owned a home nor been a landlord. So I was considering flipping sub $40K 55+ homes. Some comps are going for $60-70K. Even at the $40K mark (some are even as low as 25K) and minor rehabbing, there is money to be made...at least I feel there is. I will be meeting with a friend/REA this weekend to talk with him and see WHY some are listed so low ($25-30K) when some down the street are listed at $70K. For this price point I would be looking for private money or maybe even hard money, fyi.

Is this a good way to start out building capital for future rental properties?