PSA - THIS IS A HORRIBLE DEAL RUN!

[Account Closed]

A new investor just posted this potential 'deal'. I am not beating her up in any way, but it made my blood run cold. Full disclosure - I got completely wiped out in my investing in Virginia from 05-10. It's how I ended up in TX. I did crazy stupid deals like this that made me go broke. I hope we have convinced her on that thread to run screaming from this pending train wreck with doom. 

I consider my mission in life to warn others from nightmares of negative cash flow, working a job to keep the 'investment' afloat, collection calls, and Chapter 7. 

Here's the 'deal.' BEWARE, rookie investors!

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Hi guys. I'm in the process of purchasing a property, but I just realized it has negative cash flow when I factor in the maintenance and vacancies. However, I think one of the main reasons it has negative cash flow is because I'm going fha and I am putting a small out of money down, which makes the principal and interest payment higher than it would be if i had put down 20% in a conventional loan. I think the deal could improve over time if I refinance into conventional down the line and put more money down. What do you think? Here are the numbers:

purchase price is 270,000

property is a triplex with all 3 units already rented to long term tenants. the bottom tenant is moving out and that is where I will be living for a year.

Principal and interest is 1300.00

taxes are 2400 a year

insurance is 1800 a year

rents come out to 2100 per month total for all three units.

down payment is 3.5%

Here are a few bonuses

the property is in a really good neighborhood that is up and coming and this is a neighborhood I personally would want to live in for the next year.

Also, the units are outdated: old kitchens, carpet, etc. With some rehabbing, I could raise the rent so that the total rent for all three units is about 2500 per month.

So after i move out and get my unit rented. I think I'm looking at about a negative 169 a year or so. but if I refinance, pay down the mortgage and get rid of the PMI, things could look better.

Is this doable? Is this a bad deal? what are your thoughts on this?