Need help analyzing deal

[Andrew Graziano]

The deal: 2 bed 1 bath single (has small office that was previously being marketed as a bedroom). Small cottage. Roof complete tear off in 2014 along with furnace and hot water tank. No basement or real attic. Class c neighborhood. Asking price $49k $5k down 6% 12 year amortization owner hold. After negotiation I've got the seller to verbally agree to $45k purchase price $5k down 6% 30 year amort. 10 year balloon. That leaves the mortgage payment at $240, all expenses in about $400. No real work to be done except paint and some yard work. I spoke to a tenant next door who pays $600 for a similar apartment with larger rooms but it worse shape. Expecting to fetch $650 for this unit. I'm being priced out of everywhere else in buffalo with such low inventory and skyrocketing prices. I expect the property and rents to increase The seller is 76 years old and is liquidating his portfolio. The way I see it my risk is very low as the mechanicals are all there and my largest risk is bad tenants. I can afford the carrying costs to be very stringent with my tenant screening. This would be my first rental. I've done a flip in a nearby suburb and also managed some other of my family's rentals. My question is about the spread. Is it too thin? Would you do this deal? If I don't take this I'm afraid I'll keep analyzing deals and not jump in. Thanks for the input BP.