Rental property analysis - Am I being too conservative?

[Andrea Campo]

Hi Everyone, 

I'm starting to analyze some rental properties in the Pittsburgh area - this is just a theory exercise for now, since I'm moving there in May.

Anyway I'm struggling to find properties that cash flow, even when they fall into the 1% rule. Maybe I'm being too conservative?

Here's an example of an analysis of a $170000 townhouse that rents for $1700:

Purchase price = $170000

Closing costs (5%) = $8500

Pre-rent holding costs = $1200

Rehab/ Repair costs = $5000

TOTAL COST OF PROJECT = $184700

Down payment (25%) = $42500

Loan = $127500

Investment = Total cost of project - Loan = $57200

Rent = $1700

Mortgage (30 year fixed at 3,62%) = $581

Property management (10%) = $170

Maintenance and repair (10%) = $170

CapEx (10%) = $170

Vacancy (5%) = $85

Water and sewer = $75 (from Pittsburgh Water and Sewer Authority)

Insurance = $100

Taxes (2.08%) = $294.67

TOTAL MONTHLY EXPENSES = $1646.23

CASH FLOW = $53.77 

CASH ON CASH RETURN = 1.13 %

Are my assumptions ok? 

I know that maintenance costs and capex depend on the age and condition of the property, but since I cannot visit the properties (and also I don't know the maintenance costs in the US yet) I'm assuming a 10% for each. Too much?

Also $100/month for insurance, makes sense?

Any opinion from more experienced investors would be much appreciated!

Thank you, 

Andrea