This would allow you to indefinitely defer all of the tax if you sold, and use the tax you would have had to pay, to purchase something nicer in an area with a greater growth potential.   

If you live there 2 years or more before selling you will be exempt from tax on the 1st $250k in profit which is a nice bonus. 

Are you quoting net cash flow - after taxes, insurance, maintenance/repairs, property management if needed? 

Of course, I had to make additional assumptions about the cost of property taxes, insurance etc. 

David,Yes, investing out of state can be a wise choice especially if you live in a State like CA, NY, NJ, CT where home prices are over priced and taxes are brutally high.

This creates two loan payments ($100,000 of equity and $300,000 on the new mortgage).Key NumbersHome Equity Loan Interest Rate: 6%Mortgage Interest Rate: 7%Rental Income: $3,000 per monthExpenses (management, taxes, insurance, maintenance): $800 per monthIncome and ExpensesMonthly Rental Income: $3,000Monthly Expenses: $800Monthly Mortgage Payment: $2,000ExplanationThe investor earns $3,000 in rent each month.They pay $2,000 on the investment property mortgage and $800 on other expenses.This leaves $200 profit each month or $2,400 per year.However, you have to pay $6,000 interest on the equity borrowed.This leaves you with an annual loss of $3,600.While the rental property generates positive monthly income, the interest cost of borrowing the initial $100,000 results in an overall loss.

Outside systems like plumbing, sewage, and the water heater should be in good condition, and make sure there are no signs of pests.Additionally, look into property taxes, insurance costs, and zoning laws that could affect future development.

That's including high Baltimore property taxes, expenses, mortgage, etc. 

They will handle the collection and distribution of payments, amortization, escrow accounts, and any tax documentation. 

And, factor in the depreciation and other tax benefits, deductions, home office, vehicle expenses, etc.