Looking for feedback on my first potential investment!

[Rhianna Raslan]

Hello. I am currently searching for my first investment property in Charlottesville, Virginia. I chose this area because I am very familiar with it and the rental market is good due to UVA/UVA hospital. I also have a few connections there with realtors and contractors. My goal is to buy my first rental property by the end of this year and then buy another by April 2017. 

I am currently torn between buying something I can pay off in cash or using a lender for a more expensive property. My thought process is that I would benefit from buying something within my pay off range for my first deal and then using a lender for my second.

Here is the information and the numbers for the place I am interested in:

Purchase Price: $46,000

(Market Value about $55,000)

HOA fees $265 monthly

Personal Property Tax: $544 annually or $46 monthly 

Insurance: $50 monthly

Rent Potential: $800-850 (I'm sticking with 800 for my calculations to be on the safe side)

If I obtain $800 a month for rent and take out expenses  (tax, hoa, insur) that leaves me with $439 a month cashflow. I rounded down to $400 because I don't want to overestimate. At that rate it will take me 9.5 years to get back my original investment.

This property is a foreclosure so my negotiating room might be limited. I was planning to offer $35,000 - $37,000 in hopes of getting it for about 40. 

1 bedroom 1 bathroom 512 sq ft

This is a non-warrantable property because the complex owns a majority if the units.

I spoke with the complex manager and their identical units are not rennovated, (nor is this one) and are renting for $850.

It's in an apartment complex with a fitness center, laundry facilities, pool and clubhouse.

What do you think of this investment? What is your advice on buying for cash at first versus using a lender? Any and all advice is greatly appreciated! Thank you in advance!