Houston area property analysis

[Denise Mayo-Walley]

Hello BP community!!!!

Several hours ago I viewed a property with my realtor and was very excited about the property potentially being my first- that was until I started crunching numbers. I sure hope my cash flow calculation is incorrect. Please help! And keep in mind this property is in Houston - 2% rule is RARE

Here are the numbers:

Potential Purchase Price: $99,000

Cash to close (downpayment plus closing costs): $19,800 + $5,900 = $25,700

Mortgage: $401/month = $4,812/year

Income:

$1200/month = $14,400/year

vacancy rate (10%)= $120/month = $1,440/year

net income = $12,960

Expenses:

Property taxes = $1853/year

Insurance (complete guess): $1380/year

Property management (though I plan to self manage): $1,400/year

Maintenance & repairs: $1,400/year

HOA dues: $411

Total expenses: $6,524

NOI = $12,960 - $6,524 = $6,436

Cash flow = $6,436 - $4812 = $1624 (???)

Cap rate = $6436 / $99,000= 6.5%

***So this translates to only pocketing $1624/ year - more if I self manage and repairs are less than I budget for?

I am trying to figure out if I should make an offer. There are 4 other offers as of today and the home has been back on the market for 2 days. I want to make a smart decision based on the numbers and not on the number of offers.

Thank you for your help!!