Does this deal make sense - another set of eyes please :)

Question

Florida - Condo - 2 bed / 2 bath - $79,000

HOA $260 per month (im aware HOA dont normally make good deals)

Taxes $780 (will jump up to 900 after sale most likely - not currently homesteaded)

Current tenant just signed 12 month lease - $1k a month

I would put 20/25%

B Class neighbourhood I would guess / low crime on truly website and schools 5/10

Renovated kitchen and bedrooms in the last year

on paper is seems like an ok Deal - thoughts please

I would need a property management company

Christian Weber · Answer

Valid - I had pumped into a calculator 10% management, 6% maintenance, 9% vacancy

Tenant pays all utilities, garbage etc

Its the HOA that messes it up. It just was over the 1% rule and I didnt know how much the HOA would effect the result

Christian Weber · Answer

So I would stick in 9% vacancy (there it no HOA approval period and the unit generally rents in 2 weeks so a 1 month vacancy seems valid)

Tenant pays all utilities, garbage, will have renters insurance

Sean Martin · Answer

For me it would be a no.

Preetham Gowda · Answer

You have mentioned that you will need a property management company to lease and manage. Even at 8% PPM and 15 day rent for leasing and 2 year turnover average, thats another $160 a month. You have not considered insurance, vacancy, opex and capex. Even with the tenants paying rent, this will be pretty tight to cashflow.  If you are ok being CF-Zero, but are in an appreciating market it may still work out. It all  comes down to your investment goals.

David C. · Answer

Would need an good estimate for expected expenses (is the tenant paying all utilities, etc).

Just from the numbers alone monthly:

$1000 rent - ($260) HOA fee, and approximately ($95 Taxes), mortgage around ($275), that leaves you with $375 monthly before other expenses (Insurance, sewer, garbage, etc).  So it really depends on your expenses.  You also need to factor in vacancy as well.  Too many unknowns for a good answer, but thats the best I can do.