Newbie in Raleigh, NC with Huge Opportunity

[Trey Thomas]

Hi Everyone,

My name is Trey Thomas and I'm a real estate photographer in Raleigh, NC who has been dreaming of a career in Investing for 10 years now.  I've read a lot on this site and from other sources and am pretty good friends with a few folks that have quite a bit of experience flipping and renting.  I also went to the inaugural Raleigh Bigger Pockets meet and hope to attend more in the future.  

4 1/2 years ago, I made a really good buy on my primary residence 6 blocks east of Downtown.  It was a new home then so everything is still in great shape.  I purchased the home and the vacant lot next door for $189,000.  Currently, I'm using the vacant lot as yard space.  My home and its lot are worth $225,000 now and would rent for $1500.  My mortgage is $993/mo and I owe $155,000.  I owe $10,000 on a separate lot loan which runs $184/mo.

I have my eye on a move-in ready home in a neighborhood that is just starting to see a lot of investor action.  It is priced at $139,900 and I would like to use it as my primary residence.  I will then rent my home at a $507/mo. cash flow and start construction on a new home on the vacant lot.  My contractor, who is also a friend, has built the exact home for $160,000 and I'd list it for $250,000.

Assuming I purchase the home for $135,000 and sell the new house for $240,000, I'll lower my monthly mortgage payment by $404 (incl. ins. and tax), have $70,000 equity in a home worth $225,000, profit $507/mo. from renting that home (meaning I'll have $911 extra each month), another $10,000 equity in a home worth $140,000, and gain around $55,000 cash.

Any objections or advice?

[Dave Hurt]

It looks like you're just subtracting your mortgage payment on your primary from the projected gross rent to come up with "cash flow" and not factoring in taxes, insurance, maintenance, management, etc. unless I missed something?