New investor in Minneapolis, MN: planning for first deal

[Madeline J.]

Hello all! I've spent a couple of months perusing these forums, listening to the podcasts and reading real estate books. I am from Minnesota and currently at school (health care field) in Oregon. My goal is to work full-time in my field and use my savings to invest in real estate which will eventually hopefully become a passive income stream. I'm planning to move back to Minneapolis in June 2017 upon graduating. Currently, my plan looks like this -- I would appreciate any cautions or advice you have. Thank you!

Outline:

1. Get pre-qualified for a mortgage around January 2017 (must wait until the same calendar year as purchase, correct?).

2. Find a duplex in NE Minneapolis (or possibly parts of Camden, North Loop, St. Louis Park, Golden Valley, Robbinsdale, Brooklyn Center)... examples of recent sales I would like to find something similar to:

https://www.redfin.com/MN/Minneapolis/344-18th-Ave-NE-55418/home/51349369

https://www.redfin.com/MN/Minneapolis/2236-Pierce-St-NE-55418/home/50202224

Based on Craigslist, it looks like you can get about 550 per bedroom, or about 1100 for a two-bedroom. Does anyone have experience renting in this area and can comment on these rates? 

3. Get an FHA loan or FHA 203k loan depending on how much work the property needs. Assume 35% of gross monthly rent toward vacancies, repairs, and future property management. I chose these higher numbers because I don't really know what I'm doing (although I'm learning as much as possible) and most of the duplexes in this area are from the 1940s or earlier. Any thoughts on how to make these rates as accurate as possible? I also have been told that I should have 6 months of expenses saved. Is this number appropriate or should it be higher for an older property, built in say 1920?

4. Analyze net cash flow including taxes, MIP, upcoming cap ex expenses, insurance, and P&I. Am I missing anything?

5. Put in a lowish offer and find tenants with good credit scores, clean backgrounds, not temporary employment, good references.

Other questions: 

- If all goes well I could refinance into a conventional loan with 20% down after the seasoning period or about a year. However, while this would improve the cap rate since I wouldn't have to pay MIP, it would reduce my cash on cash return since I would have much more money tied up in the down payment. Thoughts on what to do with this?

- I'm very excited about the process and have family in MN who are willing to look at houses for me and actually have experience with buying and repairing old homes. Also, what if the historically low mortgage rates don't last another year? But I understand that with an FHA loan you need to move into the place within 60 days of closing. Is there any way I would benefit from starting this process sooner while I'm still on the west coast?

- Finally, a curveball... I am currently living in Portland, OR where home values have skyrocketed over the last few years but rent has too. Would there be any major benefits to looking at this market instead of MN? I'm not planning to stay here much longer than another 1.5 years. 

Any feedback would be much appreciated! Thank you!

Maddie

PS: Please let me know if this post doesn't meet the forum guidelines and I will edit it.