Would you take $100/m?

[William S.]

Thinking about buying a rental that works out to be $100/m after I run my numbers. It's a SFH in a good school district. I'd say B+ area. I am self managing this but still factor in PM expenses incase I move. Although I could still pull of self managing from a distance due to the tenant quality I think.

$83/m repairs (toilet clogged, minor tweaks, etc) $1,000/yr

$150/m capex (all of the major items are less than 3 years old, but will eventually need replaced many years from now)

PM $112/m

Lease Fee $58/m (2 year leases with 1 month vacancy)

$100/m cash flow with PM

$270/m cash flow self manage

I think my repair budget is high. The house is in great shape and it's in a desireable area. Vacancy should be minimal since this home would be desireable for families. Once kids are in the school, I doubt they'd want to relocate. Thoughts?

Normally I would like to see $200/m, but have not found this and that amount of cash flow would leave me with a house in a bad area where there is more risk. I imagine those look good on paper, but in reality don't work out as well. Normally I buy turn keys out of state but am considering getting one locally to gain some experience. My girlfriend and I also may want to move into it at a later point incase we have kids.

[Joe Villeneuve]

You answered your own questions before you asked them.

Are your out of state investments working out for you?  If so, why would you want to invest in a market that doesn't.  If you are looking to buy this house that only CF's at $100/month, and your minimum is $200, you're negotiating against yourself.  If your minimum is $200...it's $200...move on.  Don't try to rationalize a bad deal into a good one by using phrases like, 

1 - "I think my repair budget is high. The house is in great shape and"
2 - "... it's in a desireable area."
3 - " Vacancy should be minimal since this home would be desireable for families. Once kids are in the school, I doubt they'd want to relocate"

All of these statements you made are examples of you trying to make a bad deal look good by rationalizing that things you have no control over will fix what's wrong.

It's a numbers game...numbers with "$$$" in front, and not ones with "STreet Addresses" in back.

Move on...you're telling yourself this deal doesn't work...listen to yourself.  You're right.