My First Rental Investment

[David Zhang]

I have stumbled across BP a week ago and is amazed at how we as a community so willingly share our real estate experiences and opinions. Needless to say, I wish I had found this site before I bought my first rental property this February. I want to provide the numbers to the community and see if you guys and gals can provide me with some inputs. First of all, I am a 35 year old passive investor located in Houston, TX that has a demanding day job. I am not handy at all when it comes with home repairs or maintenance. My goal is to have 5 to 6 rental properties in 5 years as a source of side income but have no plans of quitting my day job anytime soon. With my current job, I can save about $3500 / month which can be used to invest in future rental properties. Below is the a condo I bought near my work this February.

Area: Near Texas Medical Center in a very nice safe neighborhood with good schools.

Property Type: 860 sq ft 1bed/1bath Condo.

Cost: $81000

Remodeling Cost: $6000

Finance Term: ALL Cash

Currently Rent: $1000

Maintenance Fee: $285 / month

Property Tax: 195 / month

Repair Budget set aside: $50 /month

Cash Flow: $1000 - $285 - $195 - $50 = $470

Cash on Cash Return: ($470 * 12) / $87000 = 6.5% (approximate)

My question is if this is a good investment to own. After reading the discussion forums here, most investors are looking for deals close to 20% Cash on Cash return so my investment looks pretty bad in comparison. What I like about this rental is it is very very easy to rent, it literally got snatched up the first day my realtor put it up for rent. It is easy to manage as it is a condo and the maintenance fee covers all the external maintenance of the property. If you feel this investment is not a good one, please provide some alternative way to invest this capital. Thank you guys for taking the time to analyze my situation and any input is greatly appreciated.

Dave