This is strictly my opinion, but I think it makes sense.   When deciding to start rehabbing homes, I suggest that you make the first one a home for yourself.  This can be a great learning experience.

My Reasons:

• No rush
• No need to worry about carrying cost
• No risk of losing money
• After fixing it up, you can get an appraisal to see how you did.  If you did well enough, maybe it's time to move
• You can live there a few years, build some appreciation, avoid taxes and move up to a bigger and better house

It may not be for everyone, but it worked out for me.  We bought a small 2 bedroom house for $57,000 4 years ago.  It's not in the most desirable part of Kansas City, but it's still a nice neighborhood.  We spent several months remodeling most of the house, but kept the expenses very reasonable.  We recently got an appraisal at $108,000.  We're moving up to a house in the 200K range that needs just as much if not more work.  I estimate it to be worth around $250,000 in a couple of years after our rehab.  Since we will already have about $50,000 in equity from our first house sale, plus our new house will be up $50,000, we can move up again if we choose to.

Of course there are always cons as well:

• No rush.  Without the pressure, it will probably take 4 times as long to accomplish what you want.
• Just like with any rehab project, there could be unexpected repairs. 
  
• Inconvenience of living in a house that you are working on
• You may fall in love with it an not want to let it go (but that's not a bad thing).