How to fund a flip for me to live in

[Andrew Kim]

So I'm new to the game, trying to buy my first house. I want to buy a SFH, 3-4 bedrooms that I live in, and create a positive cashflow, and use it to fund possible future purchases. I'll be using one of the DP assistance programs here in Atlanta.
My parents have paid off their own home and also a rental unit. I know their house they live in will appraise for $150-200K min. (zestimate says $216K) and their rental will appraise for at least $55K, but probably a lot more. What if they took out a home equity loan on one of these properties, buy a house through Net Worth ATL or some other entity as such. I guess they could get a hard money loan as well. Then they renovate the house, and sell it to me at market value and make $20-40K profit. My parents could use the extra money, so the thought of getting that kinda cash sounds like a major win/win. 

My question is, what's the worst case scenario for this? I would never do this if it risked my parents' properties or they ended taking a net loss in the whole ordeal. Just trying to think outside the box. Thanks!

This just in: We may have found some deep pockets to fund the flip.  We'll see!