Starting with an owner-occupied duplex is a smart way to build equity and gain experience.

In short, the previous owner made a deal and sold the house while they were still living for monthly cash payments until they died.  

The private property owner is responsible for maintenance on the private property.

However, nearing retirement, with our past experience in mind, we decided to try it again, this time just rehabbing one house to flip.So, I set up a self-directed IRA so we could use the retirement money we had left after the recession, and bought a foreclosure house that needed a lot work.

Nate @Nate Marroquin   You can use the income from your tax returns on the current rental adding back your paper loss (depreciation) and add back the mortgage interest, property taxes, home owners insurance deductions on your tax returns. 

This isn't totally necessary, but meeting property owners if you need to is a great way to win a deal

It is similar to you renting a hotel room and deciding to stay.  

Maintenance at at PM company or one of the big hedge owners like AH4R, leasing at apartment complex will teach you a lot about applications, fraud, leases, collections, evictions. 

I almost exclusively work with investors and business owners in buying and selling in Baldwin County. 

Whether the lender decides to do anything, and exactly what they decide to do depends on the lenders particular strategy, target ROI, risk tolerance, current interest rates, interest rate of subject mortgage loan, etc.