Townhome investing. Confused on numbers

[Hina Pasha]

I have invested in single family detached homes in the suburbs before. But recently I have been looking into townhomes in the city and am making an offer on one which is part of a community. Are there any drawbacks going into townhomes investing? Also, i am a bit confused with the numbers and would appreciate any advice from all you seasoned investors.

It is a 3bed/3.5bath (2000 sq ft) $460000. HOA $2350, Taxes 10K, Insurance 1850. Rent estimate $3200.

Any feedback will be appreciated. Thank you

[Marshall Leipprandt]

@Hina Pasha I don't have any issues with townhomes as long as the numbers look good. The same general analysis applies to a townhome as would apply to a single family home. Here are some quick numbers on this deal:

Annual Estimated Rent: $38,400 

Annual Estimated Expenses: $47,080 (breakout below)

Debt Service (Assuming 20% down and 5.5% interest rate at $460K purchase price: $25,200, Taxes: $10,000, HOA: $2,350, Insurance: $1,850, Property Management (10%): $3,840, Vacancy (5%): $1,920, Repairs/Maintenance (5%): $1,920

Now, your actuals might be different, and you would have to add in if you are paying for anything like utilities, internet, landscaping, etc. This would make your cash flow even more negative. Overall, it doesn't look like a great deal as you are negative cash-flowing around $9,000 per year. I think you can find much better ways to deploy your capital for a better return on your money.