What would you do?

[Jason Burton]

Forums,

I have the opportunity to buy a house with a owner occupied loan with about $12,000 out of pocket to get in. Here are the details. Purchase price $162,500. Comps in the area sold for about $170,000. My long term plan is to buy and hold SFR's for cash flow. It will rent for around $1250-$1300/month and is in a B to B+ neighborhood outside of a military base. None of the houses in the neighborhood are available to rent and the other house for sale is pending. I would be living in the home for at least 5 months and maybe longer, but it is unlikely that the military will keep me here past the 5 months. Based strictly on the numbers and some of the common rules it seems like a bad deal (50% rule).

Rent: $1250
Management: $125

Maintenance and vacancy I factored at $125 (5% for each; built in 2005 low maintenance and very low vacancy for the neighborhood)

That leaves $1000 to cover the mortgage payment and insurance. After all is said and done it would cash flow about $50/month. There is something about it that makes me want to do it yet there is a part of me saying that I'd be crazy to do this deal. What do you guys think? Thanks in advance for any of your thoughts.