Deal or No Deal: Condo Potential?

[Justin Ignacio]

Hey Las Vegas Investors,

I'm a real estate newbie looking to learn.  I'm transitioning career fields in about a year and anticipate a significant pay cut.  I currently own and househack a 4 br/3 ba in the Centennial area.  Prior to leaving my current job, I plan to rent out my current home and downsize to a condo. My intent is to reduce my monthly expenses while simultaneously getting started as a rental property owner. Here are the numbers if I rent my current house (thanks @eric fernwood , I'm borrowing the equations you've used on your posts): 

Purchase Price: $275,000
Comps: $320,000 (house with exact same floorplan/landscaping across the street sold for $337k on 3/13/20)
SqFt: 2,200
Beds: 4
Baths: 3
Stories: 2
Financing: 30 yr fixed at 3.25% ($0 down and closing costs were covered by seller)

Cash Flow = (Income - DebtService - ManagementFee - Insurance - RETax - PeriodicFees)

Cash Flow = ($1700*12 - $1150*12 - $1700*12*8% - $528 - $2985 - $49*12) = $867/yr or $72/month
Note: this formula doesn't account for occupancy or maintenance however the house is 5 yrs old, in good shape and I have a contingency fund dedicated to these expenses.

Now here's the info on the potential condo purchase:

Location: Southwest Las Vegas, near 215 and Buffalo
List Price: $175,000
Comps: $185k-$195k
SqFt: 1,167
Beds: 3
Baths: 2
Financing: Pre-approved for conventional 30 yr fixed at ~3.7% with 5% down

The seller currently has tenants with a lease that ends in June.  The tenants are students at UNLV.  With all the COVID uncertainty, I put in an offer at $160k with contingencies that allow me to back out for any of a multitude of reasons.  I anticipate about ~$10k in basic repairs and maintenance when I move in. Here's what the potential rental revenue would be if I decide to rent it out in the future (calculated using a sales price of $165k):

ROI = (Income - DebtService - ManagementFee - Insurance - RETax - PeriodicFees) / ( DownPayment + ClosingCosts + RepairCosts)

ROI = ($1200*12 - $770*12 - $1200*12*8% - $480 - $850 - $170*12) / ($8250 + $2000 + $10000) = 3.1% ROI

Cash Flow = (Income - DebtService - ManagementFee - Insurance - RETax - PeriodicFees)

Cash Flow = ($1200*12 - $770*12 - $1200*12*8% - $480 - $850 - $170*12) = $638/yr or $53/month

I can cash flow positive for both (not accounting for occupancy and maintenance) and downsizing would help to reduce my monthly expenses.  It would take about $20k to buy/fix the condo.  I have $$$ saved up to cover the acquisition costs and also unplanned expenses.

Am I missing anything?  Thoughts on the overall gameplan?  Looking forward to input from the interwebs.  @Bill B. I'm sure you've got some thoughts. Thanks in advance!

Justin