Basically, if you buy a fixer-upper and fix it up while you're living in it, after a certain period you don't have to pay capital gains on the profit you make when you sell it. 

He rented the house for 1/3 of market rent to family members and the rental contract specified that the tenants could bill the landlord $30/hr for maintenance work performed (without an upper limit).He also filed a mechanic's lien.We actually had the meachic's lien twice.The scammer filed the lien ~6 months before the auction.

I am looking daily for coastal deals from Galveston / Port Bolivar to Upper Padre and they're few and far between. 

I'll run a scenario for you, assuming that since you're long distance you'll be avoiding fixer uppers and focusing on turnkey properties.

Usually lenders want to see at least 1.25x, meaning that, if the loan payment is $10,000/year, the lender wants to see $12,500 in free cash flow at a minimum.There are other things you can do to improve your chances:  (1) hire a professional manager, rather than managing yourself; and (2) partner with other people with stronger credit scores.Just remember that, when it comes to a commercial loan, your net worth with be the upper limit on the loan amount.  

You already have a lot of knowledge and the upper hand on knowing about your market.

@Jen Matheny I am preparing myself to find my first foreclosure or pre foreclosure I need to find a fixer upper like you did.

Just bought a fixer upper in lower Alabama and looking to sell to an investor or possibly someone looking for a potentially nice home that will require a small amount of work.

A fixer upper will take 100x more work, but the returns are amazing... but turnkey, are easy and quick!   

Realtors however can still find deals that would work for what you want to do with a 3-5 year hold.If it's your first home and you don't have a handyman, fixer upper background then I would get a good GC to walk the property with you and give you round figures on the spot for repair costs.Define what the success benchmark is 10 years from now and then work back.