Strategy: Pulling equity out of a owner occupied rehab/flip

[Dan Amstutz]

Hello BP flippers and rehabbers,

I am trying to work out some details for my grand entrance into becoming a flipper.

Here is my tenative strategy:

Buy a distressed REO. -In Twin cities Minnesota, 4bd 2ba.

Use a FHA 203(k) loan. -This is a 3.5% down payment with up to 35k additional for home repairs, appliances, small remodeling, etc...
- I will be occupying the home as a primary residence.

Conduct rehab with contractors. -Cosmetic flip mainly to include bathroom/kitchen remodel.

Have house reappraised by bank. -I would assume it would be about the same ARV as other comparable properties in the area. Correct?

Refinance to pull "improved" equity out of property. -I know my payments will increase so I plan on saving a portion to pay back the difference in increased mortgage/PITI payments.

Use equity as down payment on next flip. - Buy another REO to flip in the area.

I would appreciate any professional advice. Thanks in advance.