NC-RTP Buy and Hold Townhome SFR Good Numbers and Thoughts??

[Daniel St John]

All,

My girlfriend has planned to move in with me the beginning of May.  I realized a couple weeks ago that there would not be enough room in my current townhouse (2b/2.5 bath, 1089 sqft) for both of us, since I work from home.  We decided to move into a rental townhouse with more space about 15 minutes down the road, and now i'm running the numbers on renting out my townhouse instead of selling.

I'm trying to figure out the correct "Rental ROI Numbers" even though i'm turning it from my primary residence(owned for 2 years) to a potential rental. I don't need the liquid cash, and view this as a good opportunity to learn and experience being a landlord and the knowledge I would get.

I bought the property for 139,000 2 years ago - and it's valued ~150k now. 

My Adjust Equity if sold(Removing Extra Principal Payments over past 2 years), $26689.00

My current Return on Investment ((Adjusted Equity))/(Closing Costs + HOA + Interest) is 19%.

Rent: $1100 (Range is $1095-$1175 from research and property management assessments, $1100 conservative)

Monthly expected expenses: $879.34 (This has Loan + Taxes +HOA+Landlord Insurance + Home Warrenty included)

Annual Taxes + HOA(Covers all External including Roof) : $2,939

Monthly Maintenance: Due to being new (and External + Roof Covered) - I plan on getting a Home Warranty to cover inside appliances ($456)

I have used the warranty company before and had great service.  In addition - I would think minuscule amount for handyman not worth $75 Service charge.

Cash on Cash Return on Investment = 9%

2% "Rule" - 0.73%

Annual Cash Flow -$2647

12 month Unrealized Equity Gain - $2800

My goals aren't necessarily to be "Cash-Flow Positive".   I like this as a learning experience for me, not "costing" me money, and build a bigger cash flow +Equity Gain then I would receive with my equity in a high interest tax account.  This is more of a "Diversification" idea for me, that if goes well would take the lessons learned into other opportunities.

I plan on not utilizing a property manager for finding tenants or maintenance and utillizing Cozy + Home Warrenty + Own connections.  With it being a Townhouse with external covered and major appliances covered by home warrenty - although the cash flow margins are low I view low risk with my area being a tech area and quality low cost homes are hard to find.  

Any thoughts, disagreements, or questions on the above Iwould appreciate! I have read my HOA agreements and I understand what the HOA requires with rental property. I feel confident as long as I am able to screen and get the right tenant (which I have faith in doing from my research and area)