Deal Analysis - How Do You Determine Whether To Buy?

[John White]

Good Morning...

I am contemplating purchasing my first rental property (I have  lot of real estate experience as both a Broker, and an Investor...on the fix and flip side).  For the first time in my life, I have a strong desire to hold onto some properties, and start building  a portfolio.  That said, I've never been a landlord, so am not sure what the numbers need to be for them to make sense.  The current deal I'm analyzing is a side by side duplex, in a nice town, and on a cul-de-sac.  The property is located in a town of mostly single family properties.  The asking price is $369K (seems a bit high, but again, I'm not usually looking at rental investments).  The property has been completely renovated, and it needs absolutely nothing.  Both units have tenants in place who are locked into a lease at $1600.00 per month, giving a total of $3200.00.  I am in a position to put 20% down, but the property taxes are $6000.00 per year, and I'm figuring in another $1500.00 for homeowner's insurance.  It looks like when all of my expenses are paid (and this is before factoring in vacancy or repairs), I would have $500.00 left over each month.  My hunch tells me that probably isn't enough, but I'm not sure if there is some sort of formula that many of you use, when it comes to this.  I will say that based upon where this property is (very desirable location), I'm not terribly concerned about the demand, and the ability to find very good tenants.  I'm also not terribly concerned about any major repairs, given that everything has been renovated in the past year.  That said, it's a property that I would probably hold onto for many years, so I'm just trying to see what makes financial sense.  Any and all feedback is most appreciated.

John