It is how it is recognized, taxed and falls heavy on the VOE. 

The cashflow should cove ALL of the expenses for the primary (mortgage, taxes, insurance, utilities, etc) AND put money in their pocket.

@Brad Kanouse Using Traditional IRA funds for an investment property typically incurs income tax and a 10% penalty if you’re under 59½, as investment properties don’t qualify for tax exemptions.

@Stephen Fleming your cashflow probably won't be what you think it will be:(Have you factored in the new property taxes at homestead millage rates?

Note - if you live in your property for 2 years out of the last 5, then you don’t pay taxes on the profit. 

From what I can tell, the extra equity on the house could be utilized to provide better ROI.  

Pay to separately meter the utility.

This property is gonna cash flow over $1000 a month after we're all said and done with utilities mortgage and more.

You can always use a software like Turbo-Tax and follow the prompts.

Here are the key numbers:Potential purchase price: Mid-$400k rangeAppraised value: Estimated at ~$500kRehabbed comparable properties (comps): ~$580-600kMonthly PITI (with 5% down, including mortgage insurance): ~$3400First-year PITI (with 2-1 buydown): ~$2900Monthly income (after taxes): ~4-5kLiving expenses (utilities, groceries, etc.): ~$1600Savings available: ~15-20% of the purchase priceCash to close: ~$34kRehab estimate: ~$34kRemaining reserves: ~$20-25kTo fully fund the rehab, I’d need to come up with an additional ~$15k in the short term, which I anticipate paying back quickly once the rental portion is generating income.