They don't have anything where they are willing to roll the closing costs into the rate (they will only roll them into the principal).

It is within 60 days.From my FHA loan:"Borrower shall occupy, establish, and use the Property as Borrower's principal residence within sixty days after the execution of this Security Instrument (or within sixty days of a later sale or transfer of the Property) and shall continue to occupy..."

Account Dashboard$65,000.00 PRINCIPAL OUTSTANDING$65,000.00 ACCOUNT VALUE$9,528.35 EARNINGS16 INVESTMENTS12.08% BLENDED ANNUAL INTEREST RATE$7,850.00 EST.

I have a private investor (my friend, not experienced) who would like to give me a loan for an eventual flip (we are holding it for one year first which has nothing to do with the flip itself, but a family matter), and we agreed that I would pay her interest only on her principal for that year. 

Yes the monthly payments does not lower the principal but I was going after seller financing, which is more important.

Andrew You have to factor things like:- vacancy- property management- repairs and maintenance- replacement reservesin addition to the usual PITIA (Principal, interest, taxes, insurance and assessment).

Is it better to pay extra toward your principal portion of your mortgage per month OR is it better to save for your next rental property?

@Andrew R. the NRW 91-01: Withholding on Sale of Real Property by Nonresidents is a good link - I went to bookmark it and found I had already done so in 2012 :)My understanding is that it's "withholding" meaning the seller may get some or all of it back once s/he/they file a tax return in Rhode Island for that year.Also a close reading mentions a possible exemption for sellers 55+"In the event that the sale of the property by a nonresident will not be subject to tax under Sections 121 (One-Time Exclusion - Over 55 Principal Residents)... the nonresident seller must make the gain election and file the RI Form 71.3 Election even though no withholding need be made""If the property Martha was selling was her residence and if she otherwise qualified and intends to treat the sale under Section 121 of the Internal Revenue Code (one Time Exclusion Over 55 Principal Residence), she would still have to file the election form 20 days before the closing but would complete the election form and use the special types of transactions area on the back.

What real estate investment principals can be applied here?

One of the principals of Steven Convey is "know the end in mine".