you said "rent covers mortgage." you need it to be significantly higher than the mortgage to cover all the expenses you are going to incur.hope this helps...

I've torn one down and I've prepped another for demolition, but tearing down houses is crazy expensive.

If that’s the case, you could get the area registered and then that building might qualify.HTC could qualify the rehab expenses of your property for up to 40% in tax credits.Bottom line, talk to your city and ask which developers have done similar projects to what you have envisioned and meet with those people.  

This means the property is owned by the IRA, and all income and expenses flow through it.

Thanks for the feedback; some quick stats: 9 doors across 4 states, about 50% LTV ratio with a Net Income of about 17% and cash on cash of about 3%.....in fairness those numbers include some overall business expenses not tied directly to one specific property.

As for the areas to target, my goal in getting our feet wet as real estate investors--and since we plan to be living in Sac--is to find a property we can live in while renting out one or more units to help cover our housing expenses, which we can then hold and continue to rent out when we move.

Flips have done good not great, Air Bnbs are going good not great, and rentals all were brrrr'd perfectly but like most cash flow just enough to pay the bills and cover expenses.

I'm new to investing in rental properties and I live in one of the most expensive markets in CA. 

(other issue was a leaky toilet we took care of, at our expense).  

Another note on construction cost, going vertical is very expensive now and would require have a great connect with a developer and a builder in the area.See what rents are in the area and run the numbers to ensure the rents will cover your costs and give you a solid return—using the 1% rule can help.