Regarding your analysis, the biggest thing is that you're forgetting vacancy (8%), repairs (7.5%), CapEx (7.5%), and management (10%).Using your numbers and adding in the appropriate expenses above, I think you'll cash flow ~$175/month.

(With the 1031 exchange you will not have any cash from the sale and at least as much debt.)If so, they’ll just declare it on their taxes and pay the appropriate rate depending on their income level. 

Maybe a single family home in the suburbs may be a more appropriate type of property for you to live in,

The 50% rule (more appropriately called 50% guideline) originally covers all expenses including operating, vacancy and capital expenses.

Also note that for the self sufficiency test and most non-commercial loans, if you are using that income to qualify for the loan, make sure the property is zoned appropriately.

Why not just get appropriate permits and have it inspected so you can count the space?

Friends,

I’ll try to be succinct as possible - right now I have cash savings and will be investing in real estate. My short term goal is to invest in SFR under the purchase price of $60K (3 bedroom), which i'll s...

I’ll start another post in the appropriate place.

Leverage is a powerful tool that should be used appropriately with RE investing! 

Your loan servicer then makes the property tax payments and insurance premium payments directly to the appropriate parties directly from your escrow account (where the taxes and insurance components are held; this builds up after each monthly mortgage payment).