Congrats on your first deal @Justin Thind!
And here is my opinion based on my personal experience.
I invested in my first rental properties in the south Chicago suburbs with very similar economics / pricing / rental rates / etc.
I bougtht a $30,000 house that had had rents in the $1,100 - $1,200 range and taxes of $3K.
Over the next year I bought 8 more properties in places like Posen, South Holland, Riverdale, Sauk Village, etc.
And I will never do it again based on my personal experience.
The numbers looked great on paper but here is what you can't see on paper and only experience can show you.
1). Properties managers will make or break you and most property managers race to the bottom in price to get people's business and can't afford to operate at scale. This creates a challenge for you because the asset performance is only as good as your manager.
2). Repairs cost the same no matter what the price of the home costs. Just because the house is cheap doesn't mean the repairs will be cheap.
3). You need to look at the social economic development in the area. There is a reason the houses are priced the way they are priced in any market - that is why they call it "the market". The lure of a cheap property looks like a deal but if it was they would be flying off the shelf. I don't know the economic area you are pertaining to but I do know the "lense" you are looking through as I thought the same thing when I first got started.
4). Charging $1,200 a month in rent and collecting $1,200 a month in rent is two different things. I had tenants that were amazing and I had tenants that lived in my homes for a year without paying rent becuase they "knew the system" and we literally couldn't do anything about it. This comes back to poor property management but also local and state laws play into account. Local and state officials don't always understand economics / finance and make laws that are counterintuitive to creating economic development in an area and what ultimatly happens is the money leaves because the system doesn't work. You need to look at the economics in the area and see is it on the upswing, stable, or down swing.
And....
With all of this being said I know people who crush it in areas like this but they have boots on the ground and operate at large scale. They have their own property management team, own contractors, own leasing team, etc. so they control the entire supply chain.
Take a step back and understand the bigger picture and ask your self where do you see yourself in 5 - 10 years and then get started in that direction. If that means owning a large portfolio of properties in this area then do it....if not start with something that aligns with where you want to ultimately be.
