First Rental Property advice needed

[John Southard]

I need some help deciding on a potential SFR 3/2 rental property. I've run the comps on both rental and purchase and would like some feedback from you all if this deal is worth doing:

House Price 105,000
Down payment 25,000
Mortgage 84,000

Debt payment (407)

Rent Comps 1,100

Vacancy at 8.3% (91)
Taxes (263)
Insurance (58)
Repairs (138)

total Expenses (550)

Net Operating income 550
Less Debt (407)
Monthly Cash Flow 143
Annual Cash flow 1,716
cash on cash 6.86%

I'm looking for long term hold for cash flow and appreciation.
The Repair estimate is a swag to make total expenses come in at 50% rent
Debt payment based on actual qualified loan
House needs no additional capital to begin renting

[Shane Johnson]

Too expensive for my taste. Using the same "2%" rule that people love so much, I have determined in the great neighborhood, and school district that I live in, that I have a threshold of about 1.25% at the bare minimum. 1% is just too thin, barely any cash flow, and wiggle room if the rental market drops in the future. Meaning, I want to KNOW I can rent a property for at least 1.25% of what I paid for the property. (search this site for more info on this oversimplified deal analysis approach). My two properties have been homesteaded conventional financing, so out of pocket is obviously lower, and cash on cash are higher. Your purchase price puts you dang near 1%, especially if you can only rent for 1000-1,050. In my opinion, the reason it would cash flow with the numbers your provided, is because of the equity of your down payment. Your also not taking property management into consideration. You are going to self manage for the entire life of the rental? I would want to pay $82,000 for this property, and try to pay no more than $90,000 for this property. $95,000 at the very most if there was a few other details backing that up (location, school district, surrounded by 150k houses etc). Hope this helps.