Double checking my numbers

[Andrew Stringfield]

Hello all,

    I have performed some basic rule of thumb tests on renting out a property of mine, but before I fully commit I would like to double check with you all.

I have a single bed and single bath house, 650sq ft, built in 1905.  I paid 80k for it and owe 37,500 at 3.5%. Total mortgage with insurance payment is 680 a month.  I have called around in my area and it seems like Property Management companies charge 10% of the gross Rent.  Comps in my area min: 854 max: 1440 as according to BP Rent Estimator.

I am thinking that at a minimum, I should be breaking even.

Am I crazy or missing anything?

Thank you.

[Bruce Woodruff]

Initial thoughts - Let's go worst-case.....say you can only get $900 mo rent. Minus 10% for PM, and another 10% for Capex leaves you $720. (What are your other expenses? Are property taxes impounded?)

So $720 - $680 = $40 mo profit. No way that makes sense.....

I would only take the deal if you can be VERY sure that you can get at least $1200 mo. Remember you have to pay income taxes on your profit, figure 20% for that....