I myself have considered trying to get some lots for Tiny House rental, but I do not think the demand is there in the market I am looking in.Just my first few thoughts, there is always more.

It worked for me because I had a tiny bit of money saved, I wasn't allowed to live with my parents anymore, and I had the 2 years of w2 proof.

You already posted this scenario.. while it can happen you will have to hunt for it.like all things real estate returns price for risk.. rare is there high cash flow AND appreciation.. and tiny appreciation like 3% a year might look good but its not real.. you buy a rental that will make 12% under your scenario you need to find a 50k house that rents for 900 type thing .. which you can find.. so 3% appreciation it goes up a whopping 1,500 a year.. but in reality it stays at the same value.. since the next investor wants to make the same money you are.. only way values increase substantially is rents go way up.. and in cash flow markets rents ( which is a good thing) are generally very stable with not a lot of movement up or DOWN.But for your exercise check out small little towns in PA  and outside of Pittsburg and up towards Erie.. you will get the cash flow i bet.. appreciation only on paper not in reality.

I like the idea of a tiny single family home or duplex that I can put a larger (>50%) down payment on as a first foray into real estate.

Easier said than done, but at least now you're competing in the marketplace.OK, so there's a lot more to it than what fits in this tiny post.

There is new construction popping up all over the downtown area in every tiny crevice possible.

At the end of 2021 we sold the condo we purchased in 2017 (put less than $40k down initially) to do a tax deferred 1031 exchange and purchased a ugly/tiny 4plex in Golden Hill but I was selling 1 unit to buy 4 in a better area so I was happy.....in 2022 we purchased a 4plex with low money down, also in east county using a small bank that did this type of loan at the time....So between 2021 to 2022 we purchased most of our units (11 units) with little money out of pocket since 2 of them were from cash out refi funds and 1 was from a 1031 exchange. 

Got into my first house purchase in 2010, got involved with AirBnB since 2012, learned and built a Tiny House, been enjoying learning and renovating parts of my initial property purchase and involved in taking care of others properties (cleanings, airbnb/rentals, and maintenance).

All very nice, but you still have a tiny kitchen and for a lot of buyers the house will need a paint job before they can move in.

From a realtor/buyer perspective, there's nothing worse than going to see a 3 bedroom house and finding the 3rd bedroom to be something too tiny to use, blatantly non-conforming**, or impractical.