Help Analyze my BRRR. Deal or no Deal (section 8)

[Paul Daniels]

Hello, all.  I would like to gather some input from some season investors about a possible deal I am pondering.  

About me:

I run a general contracting construction business located in central NJ specializing in distressed property repair.  We complete rehabs for investors, banks, realtors. flippers, etc.  We also do a lot of work for homeowners, insurance companies, etc.  Last year we completed 6 of our own flips.  These were low end homes bought for around 30K totally rehabbed with every single thing brand new and sold for $140K in C type neighborhoods. The work takes about 30 days but the entire process is closer to 4-6 months.  Marketing, finding a buyer who can get approved, closing, etc

About my Deal

While I very much enjoy the property flips it ties up cash flow, which prevents us from doing many properties simultaneously. There is a lot of opportunity in the rental markets in Trenton NJ.(F type neighborhoods for those of you unfamiliar with the area. Very poor high crime areas). I am interested in a SFH with an asking price of 30K. Rehab cost are approx 30K to have the home look amazing. We might be able to cut some corners and get the cost a little lower as well. We would purchase the property and complete the rehab with cash. The ARV should be around $120K. We should be able to take around 15-20K in cash equity out of the project using conventional financing upon completion. That would leave us with a mortgage payment of around $400 per month. Taxes are $1,569 per year, another $1,200 per year for homeowners insurance. We will also need to budget for lawn care, snow removal, repairs etc.

I am able to calculate flips very well but rentals are a totally different animal so I wanted to see what the BP community thinks.  My crew can easily handle the repairs of the property as needed so I do not consider that a major problem.  We will be replacing the major components of the property so we should not anticipate any major repair issues.  The question here is would this seem like a good deal for long term buy a hold even though the property is not producing major monthly cash flow numbers.

Let me know your thoughts.

Thank you all in advance.