Looking for feedback on numbers

[Dave Garlick]

Hi,

I'm new to real estate and have been trying to learn how to analyze the numbers for buy and hold on a SFH rental property. I found the property below and am looking to see if it might work.

• 2 bed 1 bath (seller ripped out a wall to make two bedrooms into one)
• Asking 69,900 (I was told there was some room there as he is a motivated seller. I'm looking to offer $50k but I'm using worst case scenario of $69.9k for my numbers)
• New roof, new heating and air, newer carpets (2 yrs), Not much needs to be done.
• Mortgage payment $265/mo (putting 25% down and finance the remaining $52,500 over 30 years at 4.5%)
• Rent $850/mo
• Taxes $58/mo (This was on the listing site. I have not fully confirmed this)
• Ins $ $33/mo (estimate based on similar property down the street)

Taking into account 10% of rent for vacancies, 10% for future repairs and reserving 10% for property mgmt, my net income is about $238.

My cash flow of $238 looks like more than the $100 many seem to look for. However, my cap ex only comes out to 5.9%. (Net income minus mortgage divided by purchase price). How important is this number for SFH? Is this more for apartments? I have seen people say they won't consider it unless it is 8% or greater. I would have to get this house for $50 to reach that number which then brings my cash flow up to $313/mo)

My cash on cash investment with estimated closing costs comes to about 13.6% 

These numbers will obviously get better if I can get a lower price for the house.

Let me know what you think.

Dave Garlick