Tim, are you referring to the Woodlands in Texas? Or the Verdugo Woodlands in Glendale, CA?
Your questions in general are exactly on track. Although not a Woodlands, TX agent (I'm in Glendale, CA) I would like to offer a few investing tips that might help you.
If you don't own any investment property (let's say only your own home), one option is to purchase a new home where you live (upsize or downsize). Your basis -taxwise is low and if you have owned the property for a few years, you know about its maintenance, issues, etc. Plus, being local, you could manage it yourself. I see quite a few pluses to owning a rental near your area.
Let's look at purchasing rental property (regardless of area). I first suggest doing research. "The Millionaire Real Estate Investor" is a very good book that would be helpful. There is also a website called millionairesystems dot com that has some very helpful (and free) downloads referred to in the books, such as cost analysis spreadsheets, things like that.
I will summarize a few basic principles:
1. You will want to purchase in an area that has good, long term potential. Buying in a market that is down now is usually a good long-term strategy.
2. The specific purchase goes from city, to area, to neighborhood, to block, to property. One rule of thumb is that you will regret more purchases that you have made, than purchases you have not made...you don't need to buy.
3. Buy at least 20% below market. You'll make money even if you need to sell it earlier than you thought.
4. I strongly recommend purchasing property you can manage. Paying a management company a 5% -10% fee to manage the property (plus have Q/A issues) is a dicey proposition.
4. Your question about current rents is right on. Also, look at future planned development. Is the area built out? What is the current inventory of SFRs?
5. Talk with a REALTOR in that area and get a handle on where the market is in the housing cycle. Every market is in a cycle.
6. Plan on long term. If you could purchase one home a year, buy leveraging the equity in those homes you should be able to create a nice retirement cash flow relatively easily...just know that markets go up and down.
6. Look at your personal tax picture. How will the properties' income and expense affect your tax base.
Lastly, your 20% down, cash flow question. I recommend running prospective properties through the spreadsheets I referenced earlier. Look also at pre-tax versus post-tax when assessing cash flow.
Also, look at expansion potential: Purchasing a run-down two bedroom in a nice neighborhood, then adding a third bed room and second bath, then fixing it up overall, will net you a handsome profit almost anywhere. The cost of construction is almost always less than the cost of purchase...again, do your homework.
Hope this is helpful.