Harrisburg PA Property Numbers Too Good?

[Trey Kunkel]

New to the whole process and I have been running numbers to try and get a feel for whether or not a deal is going to work out.  I recreated a spreadsheet to layout expenses and overall return and starting just plugging in numbers from Zillow on properties in the Harrisburg PA (front and second street) areas.  I assumed that I would find very few deals that would work out as everyone talks about how hard it is to find cash flow of +$200 per month for properties and most of their deals happen as a result of a special situation where they were able to pay like 1/2 the asking price.

However I am seeing like 5-6 properties in the 50k range that should rent for about $850 per month (again right off of Zillow). Some would likely need some refurb and I would avoid anything requiring over 10k in work, but even with this assumption I am still showing upwards of 15% COC for the first year alone and upwards of 25% if you include appreciation and any added value from improvements.

Am I missing something important like high vacancy rates or some other reason why I would not immediately want to move on these properties?  Is there a good online resource where I can verify rental rates and vacancy in the area?  I did a general Google search and did find some demographics sites that did confirm the Zillow numbers but not at the specific property/address level.

It just seems like I am totally missing something as it appears there are deals all over the place.

Here's a screen shot of my calcs.  Can anyone tell me if something appears amiss?  Are my expenses too low?  I swagged some of the percentages but overall tried to hit the 50% rule.

[Jeremy S.]

Property taxes are usually higher than you accounted for in Harrisburg. Just google dauphin county millage rates and get the assessed value from daulphinpropertyinfo and do your own calculations. There is also the required business and rental permit licenses required for Harrisburg city which isn't much ~$75. Also property management will be considerably higher. It will be 8% plus one months rent to fill a vacancy and you will have plenty of vacancies to pay for. You will also have flood insurance in SOME areas you mentioned. I also think your financing terms are optimistic but I haven't shopped that type of loan in awhile.

There is money to be made in Harrisburg city but from my personal experience, owning 4 houses for 3 years, I would recommend it for a landlord who wants to be heavily involved and do your own maintenance and management. "Passive" income is tough in Harrisburg city... again this is my person experience and my property was not in the nicer area of second and front street.