Deal or no Deal?

[Patrick C.]

Hello:

Newbie learning the rope here.  I am looking at an investment property for buy & hold.  Here are my numbers, can anyone comment on this. Whether it's a deal or no deal?

Purchase Price:  190,000 (cash to close = 20% = 38000)

Monthly Rent:  1200 (minimum)

Monthly Expenses:  

Tax = (150)

Insurance =  (40)

Property mgt = (108)

Mortgage = (630)

vacancy @10% = (120)

repairs @ 5% = (60)

Total expenses = (1108)

Cashflow = $92 :(

Cap Rate (If I calculated correctly is at 2.9%)

[Joseph Adelmann]

Hey @Patrick C.,

How did you calculate your cap rate? I came up with 4.56% by subtracting all of your monthly expenses except your mortgage from your monthly rent, multiplying that by 12 and then dividing by 190,000. So that ends up as (1200-478)*12/190000. I'm not sure if that is correct but since cap rate is the return if you bought the property in all cash, the mortgage shouldn't be included. What are your real estate investing requirements when it comes to cash flow and cap rate?