Possible First Deal

[Sean Bryant]

After some searching I think I found I found a possible deal for a buy and hold property, my analysis is below

Financing	80.00%
Purchase Price	$80,000.00
Down Payment	$16,000.00	20.00%
Total Loan Amount	$64,000.00
Interest Rate	4.50%
Loan Term	360	30
Vacancy Rate	10%
Management Rate	8%
Principle and Interest	$323.07
PMI	$0.00	0.00%
Total Monthly Payment	$323.07	$3,876.81
Income	Monthly	Annual
Gross Income	950.00	11,400.00
Expenses	Monthly	Annual
Taxes	$65.25	$783.00
Insurance	$62.50	$750.00
Water	$0.00	$0.00
Trash	$0.00	$0.00
HOA	$0.00	$0.00
Management Fee	$76.00	$912.00
Vacancy & Collections	$95.00	$1,140.00
Initial Repairs and Rehab	$0.00	$0.00
Monthly Repair Allocation	$95.00	$1,140.00
Lawn Care	$0.00	$0.00
Initial Tenant Placement Fee	$0.00	$0.00
Total Operating Expense	$393.75	$4,725.00
Net Operating Income	556.25	6,675.00
Less: Debt Service	$323.07	$3,876.81
Before Tax Cash Flow	$233.18	$2,798.19
Cash on Cash Return	17.49%
Gross Rental Yield	14.25%
Cap Rate	8.34%

I went and saw the property today and it is currently occupied by a tenant until next July paying $950 a month. When my realtor spoke with the seller's agent she stated that the tenant pays rent in a timely fashion however when I was there it doesn't seem like he is taking the best care of the property ie. trash laying around, cigarette butts outside, weeds growing. Speaking with the tenant he said he really likes the house a lot and would want to live in the house for another year or two.

Although the numbers seem to look good on paper my concern is a year down the road when this tenant leaves having to do extensive repairs due to negligence of the current tenant as well as the fact that this house was built 70 years ago. Is this a deal worth pursuing or are gut concerns accurate?