Negative Cash Flow on SFH in Cary, North Carolina

[Kit Nguyen]

First, thanks for all the posts and this website. I learned a lot by reading before jump in becoming a landlord. The more I read the more I learn the more negative cash flow I calculate. As back up case for newbie and future appreciate, I am looking for a single family house in very good or top rate public school (Blue Ribbon honor school) in Cary, NC. The lowest price is around $225K(201 Snow Camp Dr, Cary NC: 3beds/2.5bath 1600sq ft) for 20 yrs old house. This house is located in blue collar shirt area. The current price is even higher than price before the housing crash. The good houses with price $300K-$400K range are gone in the matter of HOURS after listing and some cases are less than 7 days. The other nearby houses with good schools rated are also in $200K range. Here is my calculation which shows negative cash flow: Let say sale price = $210K for the house above. Loan amount = $168K after $42K down payment. Principle and Interest = $876/month for 4.75% and 30 yrs. Expenses: tax = $175/month (1% rate), insurance = $83/month ($1000/yr), Vacancy = $140/mth (10% of rental income), Repair = $140/mth (10% of rental income), management company = $112 (8% of rental income) + $1400 for listing and find renter fee (equal to one month rent). Income is $1400/month. Add all the cost then subtract from income = NEGATIVE $127/month + $1400 due to find renter fee.

I can NOT manage the property due to both my wife and I have full time jobs + small kids.

Due to house recovery so fast around this area, the price is very higher which is so hard to have positive cash flow. Even with foreclosure houses are listing high + sold "as is" condition. The realtor agent mentioned the banks want to get some money back on the foreclosure properties during this housing recovery time. Please provide your comments on the cost analysis above and how to find positive cash flow property. I am welcome negative comments since I want to learn and improve my mistakes. This is hard income to earn...

[Kevin N.]

Kit,

Like @Chuck Holland mentioned, I think you should join the Treia meeting first. Jumping right in and buy rental property in Cary is not a good idea. I like Holly Spring because it is less pricey than Cary and Apex while the tenant quality is good. Lately it is hard to find a good deal in Holly Spring.

Other avenue you could pursue is Vietnamese community. Lots of them are landlords, join the "cong dong", go to "chu`a", etc.

The point is to learn as much as possible first.

My 2 cents.