Thoughts on this plan to get to $6k / month?

[Jj Horst]

My longterm goal is to get to $5-$6k in rent cashflow per month (not counting cap ex etc). I work a full time job and so does my wife so we're working on real estate on the side and aren't particularly wealthy so we're funding through frugality.

Here's the situation.

• We live in ATX where buying property is generally expensive
• Rents are relatively low compared to Home Values and the 1% rule never ever comes close here
• We currently own 2 duplexes. 
• One Duplex has both sides rented with about $120k in equity from mostly appreciation
• We are house hacking the other duplexed financed with FHA loan (deadbeat tenants removed from side B and rehab under way). I expect to have about $170k equity after the rehab

The Austin market has appreciated significantly in the last 5 years but rents haven't really increased. I'm sitting here trying to figure out how I can earn $5k a month on cashflow since it will take forever to pay down these properties and I won't be able to snowball very well with rent. 

I realized what might be a better way.

• Finish rehab.
• Cash out refinance both homes the max they will give me
• Use my newly released FHA to buy a 3rd duplex to house hack with a low down payment.
• Use extra funds (lets say $200k in this example) to purchase 2 $100k homes in local, less expensive markets like Waco, Temple, where we can achieve a 1% rule rent.
• $2k earned in rent
• Continue to pay down the ATX duplexes, hopefully continue to earn appreciation on their large home values and simply refinance every time we have $120k+ in equity and use to buy $100k single family home in full in a better market. Add $1k from the new property so this makes $3k/month
• Continue infinitely.

Of course crazy appreciation doesn't last forever but is there something else I'm missing? Seems like this strategy would help me reach my goal a lot faster than sticking to house hacking and then sitting around with unrealized equity but no cash flow.

Thanks for your thoughts! Every time I post someone really blows my mind with an idea I haven't thought of.