Investing In Non-Appreciation Areas

[Chris Scharf]

Looking to jump into the real estate investing world and I have come across a property that cash flows really well but it's in an area that has not (and probably will not) appreciate. This property is listed for $51,500 and it was sold 15 years ago for $51,000. I would be THRILLED if we sold this in 15 years for $55,000. We feel very confident looking at other properties in the area we could lease it out for $750 - $800 a month and we would self-manage (it's close to a college where my wife went so there would always be potential tenants). Is it a terrible idea to invest in these types of areas with the thought that we can use the cash flow for any future real estate ventures?

Here's the numbers:

Purchase price: $51,500

20% Down Payment: $10,300

Closing Costs: $4,000

Total Investment: $14,300

Gross Rent: $775

Monthly PITI: $380

Vacancies/Cap Ex: $50/month

Net Income: $345 per month

As someone that is familiar with the stock market, I know there aren't any companies pumping out $345 monthly dividends on a $14,300 investment so I'm almost looking at this as a giant dividend check. Obviously I know things can go wrong, but on paper this looks like an awesome deal.

Before we make this investment, I wanted to throw it out to the BP Community to make sure I'm not overlooking anything!