Need advice in an impossible real estate market

[Mark McCollum]

Thank you for clicking on my post. I have been working hard and can't resolve two questions. I am hoping an expert here can shed some light on my struggles or point me in the right direction.

My first question is I can't find any local properties that will cash flow. Am I doing my calculations wrong (examples below)? My second question is, since nothing locally cash flows, how do I go about finding a market outside of my area?

First a quick background - I am trying to buy my first rental property in the state of Montana. Since this is my first property, I would like to buy in my city or at least state, but I can't make the numbers work. Below are some examples (with a lot of assumptions included) of several of the most popular cities in the state. What am I doing wrong?

Example 1: Largest city in the state is Billings, MT. The cheapest 3bd+ property for sale now that is not in a trailer park is $190,000 for a 3bd 2ba single family. Taxes are estimated at $150 a month and insurance about $70. With 20% down on a 30 year mortgage with a 3.3% interest rate, the monthly payment would be around $885. It would rent around $1200 a month minus 20% for repairs and property management fees for a total of $960 remaining. After mortgage, I'd clear $75 monthly and $900 annually. With an initial down payment of $38,000, my ROI for the first year would be 2%.

Example 2: A smaller city than Billings, but a large business and college city is Bozeman, MT. The cheapest 3bd+ property for sale now that is not in a trailer park is a 3bd 2ba condo for $399,000. Taxes are estimated at $270, HOA $100, and insurance $150 monthly. With 20% down on a 30 year mortgage with a 3.3% interest rate, the monthly payment would be $1,730. According to craigslist, this would rent for about $2,000 a month. Again, taking 20% off for fees and repairs that would leave $1,600. This would result in a negative monthly cash flow of -$130 and with an initial down payment of $79,800 the first year RIO is -2%.

The above two examples are similar across all areas that have a rental demand within Montana. Is my analysis wrong? I have just about come to the conclusion that I cannot purchase real estate alone in my local market and will most likely need to look elsewhere. My search outside the state feels aimless like throwing a dart at a map. In addition to the above question about my local market, I would appreciate any advice on real estate investing from a distance. I have about $65,000 to begin with. Thanks