That means that any gain on sale would be taxable at ordinary income rates.To avoid that, the property would have to be converted to rental property prior to the exchange.You might want to reach out to one of 1031 experts on these forums for more information.

Anything out the ordinary I should look out for?

That's why right now there are hordes of Brits, Aussies, Israelis, and Canucks swarming over Atlanta; They can't get returns like this in their local markets!

You will probably have to refinance either way, as 203K are roughly 1% higher than ordinary loan.

As this would be a flipping project and the properties would be held for such a short period of time, this would fall under ordinary income (unfortunately), and there wouldn't be the benefit of paying the lower capital gains tax rate.

That's taxable income at ordinary rates, plus you'll owe self-employment tax.

With 4 br, it looks like I can get 1350 a month in rent in that area.Here are numbers I've put together so far:Monthly P&I:$802.80 (includes purchase and rehab costs...zero down)Insurance: $75Taxes: $50Occupancy: 5% allowanceRepairs: 3-5%Other: 50$Rent: $1325Cashflow: $303.47This is assuming that I pay principle back to my line of credit and not only interest, which I could if I want to. 

If this were an ordinary mortgage, she could just make the payments and keep the property. 

Assuming you operate your rentals as an individual or through a pass-through entity (sole proprietorship, LLC, partnership, S Corp), rental income is taxed at your ordinary rates (based on your tax bracket).

If @Mitchell Morwood flips the property he grosses $100K ish and after taxes makes $60K ish because he'll pay ordinary income tax, self employment, ACA surcharge etc.