In Indianapolis we perform this work for clients and they do a little better than market, but still have to pay a GC (us) for a year of our time plus their interest or opportunity costs on having so much cash out for that time period.

In reality, the equity is what you are paying for that property. 

Tenant Default: 0-5% probability of eviction or early lease termination.Section 8: Class A rents are too high and won’t be approved.Vacancies: 5-10%, depending on market conditions.Cashflow vs Appreciation: Typically, 3-5 years for positive cashflow, but you get highest relative rent & value appreciation.Class B Properties:Tenant Pool: Majority of FICO scores 620-680, some blemishes, no convictions/evictions in last 5 years.Tenant Default: 5-10% probability of eviction or early lease termination.Vacancies: 10-15%, depending on market conditions.Cashflow vs Appreciation: Typically, 1-3 years for positive cashflow, balanced amounts of relative rent & value appreciation.Section 8: Class B rents are usually too high for the Section 8 program.Class C Properties:Tenant Pool: Majority of FICO scores 560-620, many blemishes, but should have no convictions/evictions in last 3 years.

Education will pay higher dividends than investing. 

Look at their marketing strategy.

If you were to buy a house comparable to what you are renting, it would eat up that $1000/month you are currently saving.I would count your lucky stars for the cheap rent (my brother pays that much for a 1bed/1bath apartment in Long Beach) and use the savings to invest in another market.

One final point:We pay tax on every dollar we earn over our lifetimes.

Try to hang on until the end of the lease, or at least until there’s only 15-30 days left if the tenant is really keeping the property up and will let people walk the property while they pay rent.

Hey Stepan, Some changes I'm advising and seeing my clients implement are expecting an extra 3 months of holding time and undervaluing the ARV just a bit due to high inventory on the market. 

I usually try to be at 10% or more with my investments but in todays market getting a 6 or 7% is still decent.