2nd Deal making me nervous

[Tyler Witkowski]

Hello my friends!
Im in the middle of signing a contract with a deal and its really making me nervous. Ive run the numbers and its a good cashflowing property. Well I should say its a great ROI property @ 26.7% to be exact! It makes me extremely nervous because its only at $66 a door. With it being a duplex it will only net $133 cashflow. Im trying to pull the trigger but im getting a weird gut feeling I cant exactly shake off.

The first year before I change the taxable amount for my county it nets the 26% ROI with only $6000 down of my own money bringing in a total of $133 cashflow. The second year I predict it to be 32% ROI, still only $6000 of my own personal money and $163 total cashflow.  I can raise rents slightly higher giving the cashflow i want, but I dont want to rely on a prediction that can possibly fall through, I like to be slightly pessimistic in the beginning of deals. I ideally want $100 per door.

I see great ROI but not a lot of cashflow to justify it.
I want to hear all of your opinions, especially for this being my second rental property, is it a wise decision?

[Andrew Kerr]

@Tyler Witkowski - deals these days are getting tighter. If you were really conservative on your numbers and made sure to build in capex, and you have a healthly reserve already started, having a low per door cash flow might not be too bad if you can get 26% per year.

Keep in mind there are multiple wealth generators, it is the cash flow, appreciation, tax deductions (which might change some with the new tax law) and the principal paydown that can boost the ROI. So while you might be only getting $133 per month, you are getting a lot of other benefits.

What is the condition of the property? If it is old, and hasn't been updated in a long time, a couple big repairs can eat up all that cash flow for years. 

Also, take a moment to reflect on what is giving you the funny feeling in your gut? Is it purely from the low per door number? Or do you think you would have this feeling no matter what because it is only your second deal? Could it be that this deal is going to push you financially and take most of your capital which then causes you to be focus more on the low per door number? I personally found a little self reflection can help figure out what my gut is saying and that gives me more clarity on whether to move forward or not.