Looking for Advice

[Jason Jones]

Hello,

I am looking for a bit of advice as I prepare to buy my first investment property within the next 6-12 months. I have been looking for properties in Kansas (Wichita and Kansas City) because they seemed to be profitable for renting.

Let me lay out an example property that I am looking at to see if my logic is sound.

Property: $42,000 3br/2bath 1104sqft in Wichita
http://www.zillow.com/homedetails/1224-W-Dooley-St-Wichita-KS-67213/77366358_zpid/

24% down = $10,800, 30-yr at $145/month
The rental range in the area is $531-783/month

RENT: $531/month
TAXES: $43/month
MORTGAGE: $145/month
INSURANCE: $73/month
PROPERTY MANAGEMENT: $45/month
-------------------------------------------------
INCOME: $225/month

I was planning on adding an additional $50/month to the mortgage payment.

The rest of the income I would save for any home maintenance.

Is this correct thinking, and would this be a good investment?

Thank you,
Jason

[Michael Lauther]

David , please excuse my rambling, you asked if your thinking is sound.

Check out the 2% 50% rule or guide line . I use this to initially screen properties in areas with demographics similar to the one you chose.

a $42,000 price assuming no rehab should through off at least 2% in rent for me to be interested. that translates to 840 a month in rent and that exceeds even zillows estimate of 700 max. the most this property could sell for for me to go any further would be 35,000 before it got my attention.

If it could be had for 35k that and could be expected to gross 700 a month then the 50% rule says I should net 350 a month after taxes ,insurance, vacancy contingency, property management and maintenance.

After I decide if the numbers work than I look closely at the
property and the area and the financing that is available .

This example is not a good investment IMO because it does not provide good rental income nor does it provide very good prospects of above averager appreciation given the price structure I see.