Property Profitability

[Rebecca Styer]

So, I've been a member for a month or so and I've absorbed as much information as possible and I was feeling good about a particular property (this is actually my first post).

I ran some general numbers and felt comfortable with what I found but my partner ran the numbers and didn't see the profit in renting it out.

I'm just asking for some insight...

Purchase Price $35,000
Eligible for Homepath Mortgage 10% down with no PMI
Rent per month $650
I came up with a high cash on cash percentage using the 50% rule

My partner used the actual taxes $2323, insurance $432, Trash/ sewer $210, plus maintenance, repairs, legal, and accounting and it turned up in the red.

I used http://www.goodmortgage.com/Calculators/Investment_Property.html

and also came up in the red.

I'm just spinning my wheels. This property is a foreclosure and undervalued by 20K. I feel more than $650 a month in rent wouldn't be appropriate for the home. I'm not sure if the problem is that the taxes are high or if we are factoring in too much for expenses.

Is this a typical problem with homes that have such a low rent?

I also know the school taxes are slated to increase which just adds insult to injury.