You've got several factors in your favor: you live close enough, and know the area, still having family there.
That said, it is unlikely that you can get a loan for that little amount. Those kind of houses investors buy in cash and it's really only worth it if you do it that way and you buy a lot of them. Let's say you have 500K and you buy 33 of them with cash, not accounting for closing costs and other fees. At $200 a month net profit, you're making $6,600 a month profit. These houses will likely not appreciate enough to be worth even considering on the side, cash flow is your sole income here.
That said, in your calculations, you're leaving out closing costs. Those will eat into your numbers, and for a small deal like this it's not even worth financing, if you could even find someone to loan on a deal like this. It's not worth the lenders time to process a loan for this.
I paid 64K cash for my first house in a similar situation as what you described, not great but not terrible neighborhood 5 years ago. Now developers are building new homes all around there and I get $700 a month net income from it while the house continues to go up in value. I've considered cashing out my hand full of properties in the Seattle area and moving it to Ohio or some place similar, but I don't think the cash flow is worth the loss of property appreciation, and the extra work required to manage 33 units vs 4-5.