I love my home and neighborhood but I'm wondering if I should rent in to military as my husband is also military and we feel comfortable renting to other military families.

The second property will be purchased with a mortgage (you can determine how high or low the leverage will be by adjusting the proceeds you use or the price point of the 2nd replacement).You are adding some measured debt at a level that your dad can be comfortable with. 

I looked there a bit myself, but don't know the area well enough to feel comfortable.

I had two of them and both had a “small room” compared to the other rooms that we rented on the cheap and there was never any shortage of people who were happy to have a nice, clean, comfortable, affordable room to rent.

Barely a rounding error in all of this.Obviously, not everyone is comfortable with that kind of leverage, and you're right that someone making 70k a year just doing it once for an extra 12k on their tax return it may not make as much sense for. 

Hey Brandon, There are many fix and flip lenders that are comfortable lending to at a 600 score minimum.

I've seen along I-20 (between Atlanta and Birmingham), or along I-65 (between Birmingham and Huntsville), areas like Oxford, Lincoln, Pell City, Cullman etc,  there are some new builds 3bd/2ba for around 200k - 220k range, rent for about 1.5k, for a buy-hold strategy, I feel comfortable as long as it has a positive cashflow (with 25% down). 

Again, I recommend you retain professional assistance if you are not comfortable with the tax reporting obligations and tax treatment.Best of luck.

The list pulling aspect wasn't as appealing as I was comfortable with my current methods of pulling lists. 

So we can live VERY comfortably on $80k/yr.