As long as you don't touch your proceeds and do everything that the 1031 exchange rules outline about where the proceeds need to go and be held, how long you have to identify a property and then close on that property.  

Let's say I have identified a house that I could buy for cash $100,000 for a short sale(mostly with OPM.)

@Brandon YokoyaNo, the HUD consultant is essentially the inspector on the project, that:1) helps you identify the work that needs to be done to get the house code/FHA compliant, as well as helps you come up with a scope of work for what you would like to do to the property and how it compares to your available budget based on your approval/comps/etc. 2) inspects the contractors progress throughout the project and report back to the bank what’s been completed, by line item, to release draw payments to the contractor during the project.

She has identified the unit she will use as her primary residence once she is able to move in and she is very insistent on this.   

I’m having a tough time identifying a property and leaning toward pulling equity.

I know I am making a mistake somewhere so I am hoping someone can identify what I'm doing wrong or a suggestion.

I’m also originally from the south of Boston area so I know you’ll like the location.In regards to investing, I’d recommend identifying a market, finding a strong local agent in that market who can connect you with contractors, property managers, lenders, and on/off market deals.

Great job of identifying an opportunity and making the most of it.

I have identified a deal that has a positive cash flow in a 15 year loan which indicates , by the time I move out my 4th tenant would be pure cash flow.

By doing so, you'll be much better prepared to identify a good deal when you see one and be more comfortable moving forward.