First timer and the cash flow seems too good to be true

[Josiah Horn]

First time investor here, In a few days i am going to look at a propery in Coatesville PA. It is an REO in a B class area listed for 38K, a fixer upper. (2) 2 bed/1bath apartments. Me and my partner who are splitting the Purchase and Rehab costs have a 20K rehab budget; which we believe is enough for laminate, carpet, paint, new countertops, tubs, appliances and probably a new roof if we do the work ourselves (we are handy and going to take measurements to confirm budget). Similar apartments rent around $700 a month in its existing condition, after rehab we expect to get 850-900 per door and we are going to self manage. 58K dollars all in with comps of a rehab project around 100K

Mortgage: 20% down 30 Yr

Rehab: Line of credit 2 yr no interest

Rent: 1700 pm

Expenses: Mortgage 144 pm

Taxes 108 pm

Insurance 40 pm

Rehab Payback (2Yrs) 833 pm (24 months)

Water: 100pm

Repairs/Reserves 200pm

Cash Flow (First 2 Years) = 275 pm 

Cash Flow (Post 2 Years) = 1308 pm

ARE WE CRAZY