Below are some quick links to get engaged on this site. http://www.biggerpockets.com/startherehttp://www.biggerpockets.com/meethttps://www.biggerpockets.com/alertsHow to Use @Mentions on BiggerPocketshttps://www.biggerpockets.com/ruleshttps://www.biggerpockets.com/termshttps://www.biggerpockets.com/inviteshttps://www.biggerpockets.com/forums/categoriesREI books suggested by BPershttp://www.biggerpockets.com/renewsblog/2013/04/14/best-real-estate-books/?

Below are some quick links to get engaged on this site. http://www.biggerpockets.com/startherehttp://www.biggerpockets.com/meethttps://www.biggerpockets.com/alertsHow to Use @Mentions on BiggerPocketshttps://www.biggerpockets.com/ruleshttps://www.biggerpockets.com/termshttps://www.biggerpockets.com/inviteshttps://www.biggerpockets.com/forums/categoriesREI books suggested by BPershttp://www.biggerpockets.com/renewsblog/2013/04/14/best-real-estate-books/?

Once you have rehabbed it (cost effectively) and rented it out for say six months, a NEW appraisal should come in at least 40% more than you owe on it, which means that your Lender should approve a cash-out of 20-25% of it's new value ie. enough for a DEPOSIT on your next property purchase (and so on)...Others may have a clearer or more correct explanation.

My question is; How does living in the flip effect the tax end of this?

I know that will effect us negatively...but still would like to hear opinions since she has not paid mortgage since 07 and they have not been able to foreclose on her.

Interesting, but we need our view to be know directly to the SEC it they are to have any effect.

You have started on the right track, by engaging in studies of REI, listening to the podcasts to gain additional knowledge and understanding of this expansive field with various niches.Yes, it's challenging to have a full time job and do REI part time.

Your student loan debt is being serviced from after aftertax income, so that 6.8% needs to be adjusted for your marginal tax rate to yield what you must actually earn to service that debt (could be closer to 9-10% pre-tax).If you have forced appreciation in the house and it will appraise for 135K, you may be able to pull additional equity from the home to pay down (or pay off) your student debt ... effectively transferring your student loan (6.8%) to your mortgage (4.x%?).  

There are multiple reasons why I believe this MARKETING STRATEGY is effective.

EFFECTIVE GROSS INCOME: $89,330EXPENSES:Property Management: 7.5% = $6,700Insurance: $5,112Maintenance: 12% = $10,720 (I will likely modify this number after inspection one I have a better idea of the actual shape of the property)Taxes: $8,568Trash: $1,085Water/Sewer/Common Elect: $6,910TOTAL EXPENSES: $39,094NOI: $50,236Cap Rate: 8.37%Debt Service: $33,672 (5 yr arm - 25 year am, 5.0%)Net Cash Flow Before Taxes: $16,564Cash on Cash (Assuming 20% down): 13.8%ROE (NCF + Princip paydown): 22.1%DCR: 1.49Debt Yield: 10.5%Using 50% Rule: $83.28/unit/month