ISO First Deal - How does this sound?

[Steven Grabowski]

Okay, So I guess this isn't my first residential rental. I have another duplex that I lived in, couldn't sell, so now I rent it.

This is my first property bought with the intent of renting it immediately.

This house is a duplex - they are asking $45,000.00

It has a 2 bedroom and a 3 bedroom apartment. The 2 bedroom is rented at $350 a month - they have admitted that it should have been rented at $400. The 3 bedroom should be rented for $450

Income: $800
Expenses (50%): $400
NOI: $400
Mortgage (20 yrs @ 6.75%): $342
Cashflow: $78

This doesn't work at their asking price... I need 1.2 + debt to income ration for my lender...

So, if I offer $30,000, cashflow is $172 ($228 payment)...

Am I thinking correctly? I personally think the 50% rule expenses are high as I am doing my own managing and 'fixes'... but everyone seems very certain about it, so I'm working from their experience.

FYI: taxes are only $600 a year.

Any pointers? I think this may just be one of those houses that are just an exercise in learning, which is fine. Better to learn than to lose.