Help Analyzing this Single Family Home in DFW TX

[Jason Jones]

I'm looking into a single family home in Ellis county, TX. Nice, rapidly expanding city. This would be my first rental property so I am trying to get started in learning how to analyze deals. I would plan to self manage. Below are the details:

• About home: $220,000, 3br 2ba, 1,350 sqft, 8,400 sqft lot, assuming 3% appreciation per year. 
• Down payment: 20%, $44,000
• Closing costs: $5,000
• Upfront costs to get rent ready: $2,000
• Reserve cash to hold for this property: $10,000
• Interest rate: 3%
• Estimated rent: $1,600 +- 100, 3% increase per year

Expenses:

• Vacancy rate: 5%
• Property tax: $3,750/yr + 2% increase per year
• Insurance: $1,000/yr
• Annual CapEx: $3,000 + 3%/year

Return:

• Annual Cash Flow: Year 1 - ($238), Year 2 - $59, Year 3 - $366, Year 5 - $1011...
• Compound ROI: Year 1 - (11.42%), Year 2 - 2.97%, Year 5 - 10.49%....

Looks like most of the value comes from equity growth and hopeful appreciation of the property and not much on cashflow until may years in the future. Rents aren't high in this area so it is hard to imagine finding a property that has good cashflow from day 1. Does anyone have any thoughts on if this is a decent deal or if they have any advice on how better to look at it?

Thank you,

Jason