can you help with this scenario........

[Jim McMillen]

What do you think of this hypothetical deal. Would it be good?

Purchase price $46,000
Down Pymt: 4,600
Mortgage: $41,400

Principal/Interest payment: $275 (30 yrs at 7%)

Gross Rent: $600
Operating Expense: $300
NOI: $300

Cash Flow: $25 per month ($300-$275)

The property has a monthly tax of $55 and I’m guessing that insurance would be $25 per month. If I add up Princ/Int payment of $275 plus taxes at $55 and insurance at $25, the total payment would be $355. I would bring in $600 per month thus leaving $245 for expenses.

Maybe I’m not reading some prior posts correctly, but in applying the 50% rule, I don’t know if I look at just Princ and Int or the whole mortgage payment which would include taxes and insurance.

Also, I don’t know if I’m figuring my “cash flow” correctly since I’m not taking into consideration the taxes and insurance in the calculation.

I appreciate any input with this scenario.

Thank you.

Jim