Well, this is what i do. And the short answer on the beats, do you feel more comfortable with software (FL or Reason) or hardware (Akai MPC or a Roland Fantom). I just threw up those products because they are very popular. If you don't know, go to Guitar Center and check it out. If you are already comfortable with something, stick to it. I used to use hardware but moved to software because it does the same for less, is more flexable, and often more powerful. I wouldn't say it's a better way, many say it is, many say the opposite but it works for me.
Outside of that, if you are just doing demo stuff, you will need a mic that is probably in the $200 range. That would probably be the minimum i would want to spend. I used a Rode NT1a and i like it but i haven't done any serious recording projects yet, just things here and there. I don't rap myself, most of my work gets recorded else where. Anyway, it gets the job done. There are a few mics in that price range that are worth it, see if you can try them out and find what works for you. I would defineatly
Then you need some sort of preamp. Either a mixer or something standalone. Read up in the rack for more info, ideas. You don't need anything super expensive though.
THen you need moniters. You need a good playback system to get good a good mix. This would be my focus if i were you.
I'd expect to spend about $1000 minimum for what i would concider demo quality if you have the proper recording, editing, mixing, etc, skills. You don't have to drop all your cash at once either, buy what you can when you need.
Obviously this isn't a end all answer, that's impossible, but i hope it helps a bit.
