Is this a good deal ?

[Manmath D.]

Theres a house in my neighborhood for sale at 159,500. Lets say I'll be able to get it at 150k. I plan to live in there for 6 months to a yr. According to my local Property manager, they will able to rent it out for 1250 to 1300 (Tenant pays all utilities). 

Purchase price: $150,000.00

Closing cost: $ 3000.00

Down payment : 10%

Loan Interest rate: 4.8%

Gross monthly rent : $1250.00

P&I : $ 540

PMI : $ 45

Monthly insurance : $ 45

Property taxes : $105

Vacancy : $62.50

Repairs : $62.50

CapEx: $62.50

Management : $ 125

Total expense: $1047.50

Rent : $ 1250 to $ 1300

Cash flow : $ 202.50 to $ 252.50

COS : 13.56 %

Purchase car rate: 5.95 %

This will be my first deal. There are lot of people looking to rent here. 

Thank you for your inputs

[Henri Meli]

@Manmath D. Are you investing for the cashflow or are you investing for appreciation? I used to own a few single families in A class areas. I knew the area very well and it was a very fast growing area. The cashflow was ok, but when I decided to sell the property, I sold it 50% higher  3 years later. I then used the proceeds to 1031 into bigger things. It gave me a big chunk of tax-free cash.

So, think about your exit strategy before you make the decision. "Gambling" that the value of the asset will increase also has its risks. But, cashflow shouldn't always be the only criteria. Consider others strategies as well that might make sense for your current situation and future plans. Maybe you really don't need the cashflow at this time and can live without it, however a good chunk of $$$ in 3-5 years can help you graduate into bigger assets. 

I'm not saying that cashflow isn't good. What I'm saying is that it shouldn't always be the only driver for decisions. 

Good luck.