Please Help with analyzing First Rental Deal.

[Robert Gamblin]

I need help analyzing my first property I put an offer on to make sure it makes financial sense.  Details are below:

Side By Side Suplex in Ilinois

each side is 2 bed 1 bath ( no basement)   Very nice clean property that backs up to local park on a Cul-de-sac.

Price $215,000

Current Tenants Rent = $1450.00

Property Taxes is $3400.00

Insurance is $1450.00

Please help me break this down to determine if its a worth while investment.

I originally believed it was, but starting to question it now.  What do you believe rents should be or is it good to go?

Thanks in advance!!

[Caelan Lebryk]

So if you are going bank financing lets say a principle amount of 172k (if putting 20% down - most banks require in my area for 20% for investment). Principle payment is $821 a month, insurance is $121, property tax is $121 - bringing monthly expenses at $1063. So lets say 1450-1063= $387 cash flow. Not terrible but not leaving much room for error/capital expenses when things break down inside the home. 

Now lets think of what you have invested out of your pocket. $387x12=$4644 yearly. You put down $43k (20%) plus closing costs so lets say $53k into the house. $53k/$4644 is 11.4 which is the amount of time to recoup your investment - barring nothing goes wrong and it never goes vacant (things will happen!). So our ROI is 8.76% a year. That's a number that you need to decide if your happy with. I think this is a property that could make you money some years and you might break even on other years. Let me know if you are not doing bank financing and we can plan our numbers around that financing method!

Good luck!