Just don't want to land in prison or debt because I didn't understand the rules. 

Left with debt and nothing to show for it.

Recently graduated from medical school, general practice. 300k student loan debt, several loan at 7.9%.

I have heard of the debt relief act and want to see if you think we will qualify to use it.

Option 1: Purchase the most house for my money in order to have the most possible equity when the market goes back up and either flip or rent the place using the profit or equity in order to get into a new place (I am somewhat versed in the regulations around using rental income toward purchasing another property and my understanding is that I could count half of the monthly rental price toward my income while the principal of the property still counts toward my debt services ratio) please correct me if I am wrong.

My target cash flow is $10,000/month after all expenses (including Capex/Repair/Property Management fund allocation) and debt service.2. 

These are my returns.  13% plus a point for debt.  18% plus for an equity split.  

Why would you go into debt when the odds are against you. 

My finances: My wife and I have some equity in our house available for investing, little other debt. 

Also it would decrease my global debt ratio a lot when banks see that having increase of additional monthly payments of $900 after the refinance which I know the banks won't like and will be harder to use to make purchases.