And if you invest out of state what are your sources of information to make those decisions?

I am looking to begin investing in real estate and trying to create some form of passive income for my family.

As long as the rental income covers your rehab and financing costs, you're good to go!

Do I have to claim the down payment as income since it was used to pay back a loan?

Broker that assists Commercial Investors in Colorado source decent investment property in the state.

facebook groups are a great source for the wholesale market 

I have a prospective tenant that filled out an application.However I need some advice on qualifying this individual.The current rent is 3600The applicant is a family The Spouse doesnt work The main applicant gross W2 income is around $10000 monthThe monthly net income is $5700No car loan's No credit cards balancesThey pay $800 month on a personal loan.Since a rent check is written after net income is received.

What’s the typical income in the area?

Hope this helps to understand how a lender looks at a rental property's income to be a self sufficient asset.

The other considerations noted by other posters are valid, but when you weigh them against the high risk of extended vacancy, ending at the beginning of winter is to be avoided at all costs.  2 months of added vacancy is a 16.6% loss to annual income.