I want to use it as a cash flow initially and then possibly sell in 5 years.

It looks like this:ARV x 70% = All-in Costs Target - Rehab Costs - Holding Costs - Closing Costs =Maximum Allowable Offer or Purchase price If you can follow this formula you should always be able to get all or most of your cash back.Now to make sure you have positive cash flow you still need to be as close to the 1% rule as possible.  

You will not increase cash flow by paying down a mortgage.

@Patrick Hermans It is very, VERY hard to find cash flowing multi-families in Dallas and even harder to find cash flowing SFR outside of D neighborhoods.

With $500k in value and $400k in equity, you could easily leapfrog into a tidy little portfolio of cash flow properties in various markets in the South and Midwest.

Otherwise, if the numbers do make sense, you would be your own tenant and hence still come out ahead because your "rent" goes into your own pocket.How would the cash flow look like if you were to rent out both units and also include cost for a property manager?

They were impressed with how much research and consideration I put into everything and decided it would be a good idea if we partnered together.

Might need some extra considerations: 1) the market will have to appreciate (Austin is HOT so very possible). 2) will need to find realtor willing / able to discount commission.3) house might need cosmetic updates to align with whatever next summers home design trends are.  

If your time is more valuable because of existing family, lifestyle or work requirements, passive investing is the right choice.Similarly, if you want to maximize short-term cash flow from a 'disposable' house (one that you will sell to another investor at or below the same price you paid), look for those types of houses, neighborhoods or markets. 

You still get the long term cash flow and don’t have the underlying maintenance issues with having pets in your properties.