Here’s the situation, we’ve rented here for 12 years from an old lady that lives an hour away.

Though you still owe depreciation recapture.)This is because our “investing forefathers” used to move in to properties that were rentals for 18 years, live in them for 2 years and take ALL the gain tax free.

I went with Indianapolis area because I used to live there (moved back to CA, don't like winters) so I knew the market.

Your profile mentions doing a 'live-in-flip'.You would want to work with a CPA that is knowledgeable of real estate and also has a good understanding of section 121 which allows you to exclude some gain from the sale of a personal residence.

I have some family in Fairfield I'm originally from Davis now living in Tahoe.

Hi,I have a house in Denver that I have owned and lived in for the last 27+ of 30 years.

If that property you purchase has negative equity, are you ok with living there for a longer period of time?

She will drag it out as long as she can if you don't make the call because at this point she's living for free in your house. 

I bought my house 5 years ago with the intent to live in it for a few years and then turn it into an STR.

When we were much younger my wife and I were one of those Section 8 tenants and we lived in that same zip code during that time (it was D neighborhood back then also).