Cash-flow in North Atlanta area - "Too low - don't get that!" ??

[Cristina S.]

Thank you so much again to all those who were so kind to answer our question on the 15 vs. 30 year mortgage. 

We would like to ask one other question - this time regarding cash flow .

We've been searching for 2-3 months unsuccessfully, having lost a couple of properties to other buyers who managed to snatch them quicker. We are now trying to figure out whether we should change our strategy in any way. 

Our question is: what cash-flow level should we consider too low for North Atlanta area and - therefore skip the property?

Some background information:

- We are beginners, looking for a first-time rental. 

- Two busy professionals with full-time careers and children - NOT LOOKING to do this for living, at least for a while.

- Not spring chickens (mid 40's and early 50's respectively). 

- Upper limit budget for our first rental: 150,000

- We can put up to 60,000 cash down payment.

- We have been cautious with properties in areas that are clearly not so ..."A"...because we feel more comfortable investing in a place that looks like it would attract responsible, reliable, financially solvent tenants. This beginner-type apprehension has made us look mainly at 1 BR 1Bath condos (small) in nicer communities. Trouble with these is that they have high HOA-s which eat into our earnings.

- We've looked at some B properties too (townhouses included)...but whatever passes for B around here still doesn't feel really comfortable to us.  I've seen some B-s that made me say "I'd hate to see what a C looks like." Maybe it's an Atlanta thing, I don't know.

- When we run numbers carefully, including all expenses (which include a property management fee!), it looks like we will be lucky to make a 100-150 cash-flow with a 15 year mortgage, and 200-250 on a 30 year mortgage. Is that OK for a 50,000-60,000 investment?

This may appear rather small to other investors but we are trying to minimize risk. 

Our expenses include a property management fee because we are really busy with careers and children and we'd rather have help with our first rental. Once we see how this is going, and if it's going well, we may consider taking over the management later and increase the cash-flow. 

Given the above factors, what would be the threshold where you would say "your cash-flow is too low - don't get that property!".

Thank you so much!

[Brad Campbell]

Another option would be to contact some turnkey companies and agree to buy the property once tenant is placed and turn key. You’ll basically pay retail but for an investor that is already flipping the home it’s a win win. They find a buyer and you find a great house.
Couple of 2/1 in and around parts of Smyrna that would work well. Appx 150k purchase with $1300-1400 rent.