Am I making a mistake?

[Jessica Baez]

So it may be a little late for this post, as I am already under contract but I figured what'd be the harm in asking right?

So I work for a new home builder, we have 2 bedroom 2.5 bathroom town home community. I'm getting all my closing costs paid for, 4% discount, and I'm doing 3.5% down. I'm purchasing it as a residential property, living there for a year, then renting it out. The total amount of my loan will be about $110k. There are no rentals in the location I'm purchasing, its mostly single family homes in that area. I can't determine if that's a good or bad thing. It is right down the street from a shopping mall and a great charter school. 

I talked to my lender and she said I can purchase another residential property as long as I have the rental income reported on my next W-2. 

What would I need to rent it out at to see a profit?

[John Casmon]

@Jessica Baez So based on the figures provided we have the following:

Loan - 110,000 @ 4%, 30 years 
Taxes - $700 annual
Insurance - $300 annual
PMI - $100 (estimate)
Monthly payment - $708
HOA - $100

In addition, you should plan for other expenses not covered by HOA, turnover, vacancies, and reserves (let's just say $150 a month)

Total monthly costs - $958
Total monthly income - $1100 (placeholder)
Potential monthly cash flow - $152

You need to do more research on market rent. Your monthly cash flow ranges from $52 to $552 with these figures. That's too big of a range for me to make a decision. What's driving the variance between the $1,000 units vs. the $1,500 units? Where does your unit fall? If you have pictures, place an ad on Craigslist and Postlets listing the unit for the top end of the rent and see how much of a response you receive.

Also, banking on a 20% increase in appreciation to get out of PMI is a risky bet so don't rely too heavily on this.