It depends where you live for finding a good investment. If you live in a high cost of living area, you may want to explore elsewhere. However, if you committed to finding deals in your area, here are a couple options:
1. Find an investor friendly realtor in your area. Something you could do to increase the likelihood that your investment will perform is to do a house hack (live in one of the units and rent out the others). I would say this is your best option.
2. Go to your local REIA/other RE events in your area and discuss with other investors what they're seeing out there.
For taxes, even if you make a tax profit, you may be able to shelter some of the income:
Example: You purchase a $300,000 building. For tax purposes, you have to allocate between what % of the property is building and land. A standard % is 80% building, 20% land. So $240,000 would be a depreciable asset for your tax return. Residential buildings have a useful life of 27.5 years , so your depreciate is $10,909.
Let's assume your property meets the 1% rule, so you'd have $3k of rent per month, your mortgage would be $1,390 of which roughly $900/month would be interest. Let's assume property taxes of $4,800 or $400 per month. And then let's assume remaining expenses are $1,500 on average per month. So, for simplicity, let's just lump all expenses together. Here is the calculation:
Rents: $36,000 ($3,000*12)
Expenses: $33,600 ($2,800*12)
Depreciation: $10,909
Net Loss: $8,509
As can be shown above, depreciation can shield a lot of your income. In this example, you went from making $2,400 (without depreciation) to a tax loss of $8,509.
I hope this helps. All the best.
