How big is cash flow right now?

[Tyler Eastridge]

I am hoping to get some insight and wisdom.  I am looking to purchase my first rental property, but would love to get the opinions of others on here.

I am currently looking at a property in the Panhandle of Florida.  It  is selling for $130,000.  I won't go higher than $125,000 (hoping to get it for less).  However, I am still on the fence about even offering that due to interest rates resulting in low cash flow.  Below is that data. 

2/2 Townhouse that is estimated  to rent for $1200/month (By a property management company and another realtor/investor) in a busy part of town that's a class B area.

Maximum Purchase Price = $125,000

Down Payment: 25% down = $31,250

6.5% Interest rate with a point buy down

30 year mortgage  

Fixed expenses (Mortgage, Insurance, HOA, Taxes) = $857

Variable Expenses (Maint, Cap Ex, Property Management, vacancy) = $312

Estimated cash flow = $30

My strategy would be to refinance when rates go down, hopefully to the low 5's.  I would want to update the flooring to LVP and I may have to repair some of the siding.  The seller is willing to give the buyer a $5000 credit to closing or repairs.   Is the gamble of little cash flow worth the potential opportunity in appreciation, tax benefits, loan pay down and potential refinance in later years?

[Nick C.]

I would not be okay cash flowing $30 per month. If you have one month of vacancy that would wipe out your cash flow for more than 3 years. You're talking about making flooring and siding repairs too, this property may not have positive cash flow for decades. 

I don't like any strategy that is dependent on something that is completely out of your control, like rates going down or prices going up. These 2 things may not happen. Then you're risking a lot for getting $30 a month IF everything goes according to plan. Which it won't.