Tips for newbie investing in SFH

[James Folsom]

Hi Everyone,

I am a new investor and just placed an offer on a SFH in my own neighborhood (Norwood, OH area of Cincinnati), and this will be my first property. Really excited to get my feet wet assuming this deal closes!

First, about my goals.  I have a 10-15 year goal of accumulating 30-40 doors (both SFHs and multi's) to achieve financial independence, and provide a better future for my family.  I have a long way to go, but the only place to start is with house #1.

Here are the specs for the current home I am offering on: 

4 br, 2 ba SFH - relatively turn key, requires minor updates ($2k - $3k)

I would consider this a B- property.  It is in good shape, but not high end, and would likely be rented to a middle, working class family.  The Norwood neighborhood is very spotty.  I live in the higher-end side, and this rental would be on the lower-end side.

$63,500 - expected purchase price.  Would put 25% down

$1,100 - expected rent (may be a little on the high end - could still make the numbers work at $1,000)

$545 - PITI

$110 - 10% monthly maintenance costs, includes cap ex.  House has a new roof, furnace, and A/C so expecting lower cap ex expenses for next 10 years

$110 - 10% monthly vacancy savings

$310 - MONTHLY CASH FLOW.  Would manage the property myself, and assuming tenant would pay all utilities.

20.4% COC, 9.9% cap rate, 1.7% rent to purchase price.

If it rented for $1,000 per month, 15.1% COC, 8.4% cap, 1.6% rent to purchase price

My biggest question I have is that, being a single family, I will have higher vacancy liability since income will be $0 during months of vacancy.  Is 10% / $110 per month enough to accrue for expected vacancy in the future, or should I bump it to 15% vacancy rate?

Also, am I missing anything in my calculations?

I put an offer in, but still have time to back-out with the inspection contingency if something in my gut tells me to turn around, or the numbers don't look good at second glance.

Thanks!