What you’re suggesting is not cash flow, it’s return of principle, giving her her own money back  If she sells with your deal.

Even the funding alone is easier since you now have a cash flowing property that can help you fund your seed money faster. 

My plan is to buy the house subject to their existing mortgage, renovate the property, refinance it and pay off their remaining loan balance using the money from the cash out refinance.

I suggest 6 months of expenses to keep in cash.

Duplexes cash flow better, have less risk, AND EASIER TO MANAGE compared to a SFH.  

In a market like this you will get in the way of obvious appreciation.Then you can look for a deal that cash flows in your favorite market market. 

Starting with a turnkey cash flow rental is what I recommend for newbies!

If you are looking for cash flow, I would look at a 4-plex.

Capital gains are calculated as:Sale Price - (Original Purchase Price + Capital Improvements + Selling Costs) - depreciation (if applicable) = Capital GainYour mortgage or HELOC balance does not affect this calculation—it only determines how much cash you take home after the sale.In Massachusetts, if the home was your primary residence for at least 2 out of the last 5 years, you may qualify for the Section 121 Exclusion, allowing you to exclude up to $250,000 (single) or $500,000 (married filing jointly) of the gain from federal capital gains tax.

Finally from a purely from a cash outlay prospective short term, you could rent a house with roommates and your payment would still probably be Lower than house hacking because rates are so high, over the long period 5-10 years obviously it would cheaper ti buy, hope that makes sense