SFH Rental investing. CASHFLOW good/bad?

Question

Location: Southeast TexasDetails: 3 bed 2 bath, updated home, 1500 sq ft. Purchase price: $147,000Closing costs: $6,000Improvements costs: $7,500LOAN: 0% down, 5.5% fixed for 30 years (No PMI)PITI: $1280RENTAL ESTIMATE: $1525-$1600RENTAL MARKET IN LOCATION (Southeast Texas): scorching hot in demand for SFH rentalsARV: $179,000-$187,500Total cash out of pocket: - approximately $13,000Given the numbers above, do you believe the cashflow is sufficient enough for this to be a solid investment, or given the high PITI and questionable real estate market's future, would it be best to take advantage of the current market configuration and sell for an easy $25k profit? This is the first time I have a PITI over $1,000 for a SFH rental; but figured it would be worth it considering I get a 0% down payment from the loan offered by a credit union. For further personal details: I am 23 and have 5 other SFH properties other than this one - all in great condition. I am also a licensed realtor here in Texas.

Joe Villeneuve · Answer

Worst cash scenario looks like $250/month or $3k/year.  If you are putting out $13k in cash, that means you get your entire cost back in a little over 4 years.  I'd do it.

If you get best case of over $300/m or about $4k/year.  That gets you all your cost back in just over 2 years.  That would be a great deal.

Jerry Tello · Answer

HI @Derek Nemec, this looks to be a property that is not going to be cash flowing because it does not have enough room for the repairs, cap ex, vacancy rate, and property manager if you are looking to outsource that. Regardless what helps me determine whether or not to buy a property even if it is break even or slighlty under is the location. the location is great if its a safe neighborhood, great schools nearby, job diversity (white and blue collars), and shows signs of growth. Hope this helps!