First Deal Analysis Feedback

[John Woodington]

I'm seriously looking into doing my first deal after about 6 months of self-study in real estate investing, and I'd like to get some outsider thoughts on the setup of this deal.  The property I'm looking at is a 2 bed 2 bath single family detached town home 15 minutes north of Minneapolis, MN.  It happens to be directly across the street from my own detached town home, and is the exact same model building, so I'm very familiar with it, and the location is extremely convenient for a busy life with a wife and two kids, as I plan to self-manage it.  Here are the numbers:

Purchase Price = $176,900

PITI per month = $1250 (this includes association dues which cover lawn/snow/water/roof/siding).

Down Payment = 15% ($26,536).

Monthly rental income = $1450.

I inspected the property today with my agent, and it looks to be in pretty good shape.  The only things I saw that would need immediate attention would be to redo the laminate flooring in the kitchen and replace a leaking water heater in the crawlspace.  Roughly $1000 total at most.

Why I like this deal: The longer term plan has always been to keep our current home as a rental when we move to our next home, so having two in the same town home association would be extremely convenient.  This home has been on the market for a few weeks now, which is pretty odd considering others in the area have been selling within hours of listing for full price.  I think I could get the seller (an investment group) to come down on price slightly, but not much.  I do think this town house would be a strong asset long-term, as it is in a location and class of property that is rapidly rising in value.

Why I don't like this deal: The cash flow numbers are pretty low.  I don't need to plan for tons of capex on this kind of house, because most of the major things (roof and siding) are covered by the association.  But I wouldn't be banking much outside of the equity build each month.  My long-term goal is overall wealth rather than massive monthly cash flow, but I don't want to be losing money by any means.  This would also eat up almost all of my current savings, which I am really not willing to do.  I'm working with a couple lenders to see if I can get in at 10% down, but they are hard to convince.

Thanks in advance for your thoughts.