So, looks like you'll also pay for your "tuition" - if a deal doesn't make sense as a rental, most likely will not make sense as a flip either (since a rental you don't buy and sell, just buy).Anyway, that's why I was saying you'll not have that huge of a tax - based on your numbers, when all is said and done, your net profit isn't going to be huge.

If this property was stabilized and running well with a history of low maintenance and low turn over it makes more sense to pay current purchase price.

Here are my current options (beware, some of these may not make sense – this is my first time so I don’t know the difference between smart/stupid moves yet):A) Get property appraised and get a HELOC to use as a down payment for a property with FHA loan (2-4 Unit)B) Hope home value increases and sell when the equity >= a down payment on a 2-4 unitC) Remodel property and sell when the equity >= a down payment on a 2-4 unitD) Remodel property, Get property appraised and get a HELOC to use as a down payment for a property with FHA loan (2-4 Unit)E) Save money and wait until market rent >= cashflow, use HELOC/saved money as down payment for 2-4 unitI’m thinking option E is the wisest move but I want some other opinions to see if there's a faster way – any insight is helpful since I’m just learning.

I hate MI too and whatever you can do to get rid of it, probably makes good financial sense.

In rental kitchens, it simply doesn't make sense. 

And yes I am planing to hold that rental for as long as I can, so fixed rate makes more sense.

it is in a decent working class area with single families all around it. the upper lot is actually the bigger part of the property, so it probably makes more sense to build a house on it. how can I split it into two properties so that i can sell the upper lot?

First he put a new foundation under the current house and then he rebuilt the top of it.

It might benefit you to engage someone that understands real estate investing to be able to take advantage of these discounts, as well as use them to double check your work until to you grow to a point where it makes sense to outsource.

Having a renter that cares and has the skills to do minor upkeep makes a ton a sense for me.