Good returns on first rental property?

[Rodney Kuhl]

I posted a forum on here before asking whether it was best to purchase a duplex or SFH as my first rental property. I got a split answer with a lot of great insight. But after analyzing my situation and goals, I've decided to look at SFHs for now. I have come across a property that I think is a great potential rental, and wanted to see if you all could offer any advice. Thanks in advance!

Asking price: $50,000
Tax assessed value:$57,500
Down payment: $10,000 (20%) -- seller paying all closing costs
Rehab: $1,000 (really just needs floors vacuumed/scrubbed and stove + fridge)
Total initial investment: $11,000

Projected rent: $775/mo
Vacancy factor (10%): $77.50/mo
Total Income: $697.50/mo

Property Management (10%): $77.50/mo
Maintenance (10%): $77.50/mo
Legal: $25/mo
Taxes (capped at 2% of purchase price): $83.33/mo
Insurance: $45/mo
Total Expenses: $308.33/mo

Net Operating Income: $389/mo --- $4,670/yr

30-year Mortgage at 5.5%
Debt Service: $227.12

Net Cash Flow: $162/mo --- $1,944/yr

Cap Rate: 9%
Cash-on-Cash Returns: 18%

Do you think this would make for a good first rental property? I'm wondering if the 18% is a good start or if my money could be better used in other endeavors, like wholesaling.


What do you think? Thanks!