First, I'm not a tax professional, but I've spoken with lots of them, and this is my take...If you're treating flips as capital gains, you're illegally evading taxes.

Here my complete analysis:Purchase price:$147,500 Rehab cost:$0 Rent:$1,500 Exp, vacancy, capital %:50%Loan rate:4.50%Loan term:30Down payment %:20%Down payment:$29,500 Loan amount:$118,000 P&I payment:$597.89 Expenses, vacancy, capital:$750 Net Operating Income:$750 monthly cash flow:$152.11 annual cash flow:$1,825.34 total investment:$29,500 Cash on cash return:6.19%I think you're making a couple of invalid assumptions.

He ranks as one of the brightest real estate capital fund investors in Austin.Marisue Mullins

The velocity of money has nothing to do with the use of capital or your opportunity costs, use of funds, what else would you do with the money, from that you can see if paying down the debt is the better choice. :)

If you're primary focus is capital growth (what I call appreciation potential), then you'll want to focus on more cyclical markets where you can get a positive cash flow but stand to gain more on the "back-end".In both cases above, you'll want to stick to markets that have a sound economy and a healthy housing market.

At the time we did not have a lot of capital, but finally found a bank that was willing to lend to us (rehab costs included), but we still needed something fairly cheap to be able to make the down payment and have funds left over for reserves and paying other expenses (utilities, insurance, mortgage payments, etc).

I do not have much capital to work with at the moment and work full time.Any advice for a newbie like me hoping to get started in Massachusetts?

If so I would go that route to continue to build capital, while beginning to research out of state buy and hold investments.

I'm considering using this strategy on my next house as well to generate some quick cash for more investment capital.

Have you considered selling and redeploying the capital into something with less of an hoa fee?