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This is my first post--please be kind :)

I'm going to make my first jump into real estate investing outside that of my personal home. Here is the deal I'm looking at:

Two single-family homes in Mesquite, NV for ~170k each. One will be a model home that the builder will lease from me at the going rent rate of $1000. The other will also be rented for $1000 but have require a property management company at $100 a month. They be done under a land trust with the beneficiary as an LLC with wholly owned LCs beneath for each home. I am looking to do a 3/1 ARM interest only loan (80/10/10). Total monthly payment on the model home will be ~800 including taxes & insurance. On the second, ~900 due to the 1.5% rate increase due to the investment grade loan (the first is viewed as a second home). Hence, I will be $200 cash flow positive on the model home and cash flow neutral on the second.

I am looking to sell these after a year or so (most likely taking the 15% cap gains tax unless I can find a good 1031 exchange opportunity). Here's my logic on this--Mesquite is currently seeing a 24% yearly appreciation rate. This is clearly unsustainable for a long period of time (> 3 years). It is being caused mostly by the crazy real estate boom happening in Vegas (~1 hour south). However, retiring baby boomers are also inflating the market. I see the rates going up over the next year about 1/2 point--not enough to break the market, but something to be watched closely in the next 2-3 years. Mesquite is really coming into its own and booming population wise. A regional airport & hospital should be coming soon (thus providing higher paid, diversified income--it's pretty much all casino based for now). Rumors have also started floating about moratorium being placed on new projects as the population has boomed so much, the necessary infrastructure(police/fire stations, etc) needs to catch up.

Am I missing anything? Are there any gotchas that I may want to watch out for? Obviously, there are always risk factors to take into account, but I feel I have done a pretty good job analyzing them and mitigating them to the fullest extent possible.
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