Is this deal good?

[Will Barnett]

Hey everyone I enjoy reading the posts here but need your thoughts on this deal.

SFR 3-2-2
Purchase price $65000 plus capital expenses $5000 = $70000
similar homes in area selling for at least $100000 so a 30% yield

30 year conventional 5% down at 6.75 rate
closing costs $700
total out of pocket: $8950

mortgage is $422
insurance is $35
tax is $185
PITI is $642

Using the 2% rule the rent should be at least $1400 but I don't think the market can support that. At $950 I know I can fill it in a day.
So $950 - $642 = $308.

At first glance it seems reasonable. But I'm violating 2 rules this forum has taught me. The 2% and the 50%. Well not exactly violating the 50% rule but using it would give $53 positive cash flow.

What other operating expense am I missing that justifies a $255 allowance? I know I left out vacancy and maintenace. My plan is to rent for a 1 or 2 year period and then move the property, capturing the equity yield and 1031-ing to other properties, so vacancy shouldn't be a problem. Capital expenses include brand new HVAC and the make ready. Inspections revealed no foundation, plumbing, roof or electrical problems.

Let's say I use a 6% maintenance allowance which is $57 to cover the small stuff which leaves me $251 cashflow.

Now I know one bad tenant can totally screw things up but with proper eviction procedure and the right deposit amount based on their screening I should be alright. (I hope) :roll:

Keep in mind I'm not trying to build equity over the long haul but instead using the yield to build my portfolio, only renting it out short term for the tax benefits. I like to think of it as a long term flip.

Is this a good or bad deal?
I live in DFW if that makes a difference.