Be Conservative or Take a risk between 2 rental properties?
Hello BP,
Long time, no talk. I am in the midst of acquiring my first rental property. My dilemma is I am looking at 2 properties that are polar opposites when it comes to cash flow. Here is how the numbers stack up:
Property A.
1. Purchase price: $164,900 4 unit Building with a storefront rented out, Parking lot rented
2. Mortgage (Tax & Ins. incl) if bought @ purchase price: $1,455.37
3. Gross Monthly Income: $2,490 Gross Yearly Income: $29,880
4. Yearly Operating Expenses: $5,180 Net Yearly Income: $24,700
5. Monthly Cash Flow: 1,034.63
Property B.
1. Purchase Price: $110, 000 2 unit building
2. Mortgage (Tax & Ins. incl) if bought @ purchase price: $947.75
3. Gross Monthly Income: $1,500 Gross Yearly Income: $18,000
4. Yearly Operating Expenses: $18,000 Net Yearly Income: $14,451
5. Monthly Cash Flow: $552.25
So as you can see ladies and gentleman, these two properties are near polar opposites when it comes to monthly and yearly income. My wife and I will be managing the chosen property ourselves, we have a mortgage of $1,080 on our own primary residence.
A part of me wants to go with Property B so that I can cover the whole or part of the mortgage if I am dealing with vacancies or turnovers. However, another part of me wants to go with Property A because of the all so sexy cash flow.
So tell me, which would you guys go with? Oh and for my background, I am the sole breadwinner of a family of 4.
Would really love you guys input. Thanks.