How to check if a property good rental investment?

[Wakes Andre]

I need some advice on narrowing down the rental properties. What is the return percentage acceptable and considered good?

For example:

I have a potential property that costs $180K. The HOA is $135. Property Taxes are $270 per month. Home insurance $100 per month.

The fair rent based on the area is $1500

I'm thinking to put the downpayment $50K

With a mortgage for 30 years and an interest rate of 3.8% at the end, I may profit about $400. Would it be considered a good rate of return or bad? Should I buy it or not?

[Kenneth Garrett]

180,000 purchase with 20% down ($36,000) for $144,000 mortgage with a payment of 671.

P&I   671

Taxes 270

Insurance 100

HOA 135

Total 1176

Add maintenance 5%, vacancy 8% not including cap ex

13% of rent 1500 is 195

Total cost 1371

Cash flow 129

Looks very tight, but could work based on business criteria.  I like to see a minimum cash flow of at least $300.  Your return on your 20% down is less than 1%.

This is why I like the BRRRR strategy. Buy low, rehab, force the equity and get your money back out during refinance or at least with 24 months.

Good Luck.