This is the exact strategy my wife and I used for our first and currently only investment property, except ours is 4 hours away in the same stateProperty management is up to you depending on how passive you want it, I’m currently self managing from home and have a great cleaning/rental turning company, handy man, a heating and cooling guy, plumber to cal, etc. no different than owning a personal home really.

Heat pumps are better than resistance heating but still more the gas for heat.

What happens when you get a tenant that likes fresh air and leaves the windows open, but also likes the place warm and cranks the heat to 80*? 

Which I would never do unless it was in a very covert way since discriminations is not allowed based on family status.Case in point #2: House that is 2.9x bigger will be 3x more expensive to carpet, heat, cool, clean, roof, etc. 

I understand that appreciation is an important element for some investors, but I also see the annual ROI in both of these examples as being atttactive regardless of appreciation (if my calculations are correct).you are double counting the down payment(?)

You should start by getting estimates from contractors to determine approximate roofing, heating/air, and what other repair costs are going to be, once you have those numbers, that'll make it much easier to make a determination if the after repair value justifies the expenditures....

I am a heating contractor and $6,000 to replace a furnace I could purchase for $650 and install in 2 to 3 hours was outrageous.

What key elements are needed in my advertisements to attract leads?

It wouldn't matter what the appreciation rate was...that alone made it a loser.2 - An outhouse should appreciate better than 0.5% per year.Now, for a comparison using the same property, and a deal that had elements that would actually be considered:1 - 3% appreciation/year2 - $400/month CF

I ran a heat duct into the room through the crawl space.