That way he wont feel obligated to stay there permanently.

Here are some other things that could go wrong which may cause failures:Unknown necessary repairs (i.e. sewer lines, roof, etc)Not having cash reserves to cover vacancies / major repairsUptick of crime / vandalism in neighborhoodVandalism of propertyInfestations (pests, other)Bad tenants / No tenants / tenant family issue impacting stay (i.e. death, divorce)Rezoning of school districts / Loss of accreditation of school district Insufficient Property Management (not addressing tenants concerns, no notification of repairs timely - causing further damage, etc)Not following market pricing on rental / raising rent to frequently or too much at onceLegal issues (i.e. tenants sue for injuries on property, taxation, etc) I think you get the idea.

For a definition of this FDAP vs ECI stuff, see explanations in Nolo Guide to Landlord.

Welcome Jeremy Sawatzky my advice is to read the Ultimate beginners guide on this site.

The Beginner's Guide would be a good book to start downloading and reading here

Are you allowed to stay on well?

I suggest reading Ultimate Beginner's Guide to Real Estate that is available on this site.

I was dead set on purchasing a rental for my first property using the FHA 203k on a foreclosed home, but I am realizing now that personally, flipping a home would probably make more sense since I am not sure if I want to stay in upstate ny or move to a more tax friendly state.

Hi Sharon Rodriguez I highly recommend checking out the ultimate beginners guide on the BP site.

Stay hungry, opportunity is at every corner.