If you are setting aside funds for capex, taxes, insurance, or other expenses that don't occur monthly, transfer those funds to Savings each month and hold them there until it's time to spend them.

They get a higher return since they are covering housing cost, have the $250k per spouse primary residence deduction in gains, is a savings account, higher leverage position, lower interest rate possible, will pay more premium for location, etc.House might be overpriced for REITs but not for home owners.  

I have a followup question - I will realize a lot of capital gain from this home in Idaho, so I think unless I purchase a new primary residence I will have to pay that capital gains tax. 

From a tax standpoint, there are additional disclosures to make when selling a business asset for less than fair market value to a related third party. 

In this market, I would not finance a first time flipper at 75% profit split because the profits and success rate is lower than the last dozen years.  

This was my first deal, and house hacking made the most sense because it lowered the threshold for risk in my mind.

Real estate investing has been a passion of mine for time with my mother also having invested early on where I likely have gotten the love and desire to follow similar foot steps.I have taken last 6 months to educate myself and currently own a single family home as primary residence and would like to expand to multi family properties (2-4 units) for additional stream of income, not to mention potential tax benefits for long-term investing.Based on current living situation, I have a fair amount of equity established in my primary residency along with having enough cash to either pay off house completely or use towards investing in a multi family property.Given that I'm the sole source of income for our household with my wife being the home maker for our two kids under 2, trying to weigh out risks with getting started now or perhaps waiting. 

I do intend to stay close to home - but home provides only annual opportunities and I’m looking for year round possibilities with tax deed properties. 

However, there is no specific holding period contained in the tax code or regulations and there is no "safe harbor." 

Then rent the bigger home out using a property manager, allowing her to possibly cash flow and maintain that asset and let it continue to grow in value.Encourage her to consult with a CPA or tax attorney to explore the best strategy tailored to her situation.