Deal Evaluation for SFH Home in Richmond, VA

[Tiffany L.]

Hello! Can someone help evaluate a deal for me? 

• Purchase Price: $295K 
• Improvements: $10K in bathroom reno 
• Closing Costs: $5K
• Down payment: 20%
• Interest Rate: 2.75%
• 1 unit and renting at $1800
• Vacancy Rate: maybe 5%
• Property Taxes: $1,992 annually 
• Insurance: $888 annually

I'm also new and I'm not very familiar with the 50% rule. Can someone help explain this? Based on one calculator I used, I am seeing 8.21% cash on cash return. Is this good enough? 

[Amy H.]

Just at a quick glance, I would think you'd be around 9% CoC return gross but net (after vacancy, property management.. even if you self manage because you need to pay yourself, capex, and maintenance you would be under 3% CoC). Using 23% of rent for those categories/monthly reserves. What are your criteria for buying a property? Personally, I wouldn't do it with that low of CoC and high of cash needed to invest into the deal (closing costs, down payment, rehab).