The house has three bedrooms, two and a half bathrooms, electric everything, and a two car garage. 

Keep in mind a $300-$400 HOA fee really isn't too crazy as that should cover your water, sewer, some insurance, gardening, and outside electricity among other things. 

Those turnkey properties only cashflow now, as I have had 2 furnace replacements, 1 water heater, 1 plumbing system, 1 electrical box, and 2 major water leaks, and a sewer line replacement.As for cashflow vs appreciation, I like the balance too. 

I work as a Project Manager for an electrical contractor so I have always been comfortable with the construction side of things.

They can also help you make a rehab budget.In my experience, the major things that you are going to want to be aware of are:Structural or Foundation problemsTermites or other wood destroying organismsMoldType and age of wiring (knob and tube, romex, fuse box, 80 amp service, 100 amp service, 200 amp service, is it grounded properly, etc.)Condition, age, and type of plumbing (Galvanized, PVC, pex) as well as water source (city water vs well water)Type and Age of Sewer system (Clay tile sewer line, PVC sewer line, septic, etc.)Pets control issues (bed bugs, roaches, fleas, etc.)Condition of RoofCondition of MechanicalsCondition of WindowsI think those are the most concerning ones.

so cap expenses should be minimal for some time.He currently pays for electric, gas and water. 

(You already know this), since you want to make sure you're not going to lose money by the time you factor in your rehab, purchase and holding costs (taxes, electricity, etc). 

It clears about 32-3400 a month depending on water and electricity.

I’ve been bitten big time by the real estate bug and want to earn $10k a month in passive income to exit the rat race.

Our first property was a duplex for $35k with new electricals, new garage, new driveway, new fencing and recent roof.