My deal good or bad, 2% not possible in my area

[Kevin McDonald]

Do people really get 2% on rent of the purchase price?  At least where I live there is no way this rule will work.A house that sells for a 130k (that doesn’t need any work) will get about 1200 to 1400 a month rent; no way would it ever get close to 2600k/month.  A 200k house will get 1800/1900 rent.  I just can’t believe there are places in the US where I can buy a 100k house and rent it for 2k dollars a month.

I just purchased my second rental home, my strategy is buy foreclosed homes that need minimal work; most of these are cash only sales "AS IS" fix them up and rent them out. I use my HELOC to purchase and fix up and in 6 months get a 30 year cash out mortgage and pay back my HELOC. I am an extreme DIY'er, I do most of the repairs, and will sub out major tasks (I work a fulltime job, and as I get more houses I will have more done). I self-manage, do my own advertising, leases, work, etc….. I only want to buy houses close to me (within 5 miles) so they are easy to take care of.Here is my last deal:

Paid $108000 for house (3 bdrm/2ba, 1450 sqft rancher, nice flat yard).

$2500 settling fees (don’t have exact amount just a guess)

$2250 in supplies to fix up

In six months when I get 30 year cash out mortgage another $2500 (guestimate) in fees for new loan.  I have signed year lease tenant moving in 30 days from purchase date on this property.

Total investment that will be on loan in six months when I get a 30 year mortgage to pay back HELOC is $115250; 30 years @5% (guess on interest rate) payment is $619/month.Taxes, HOA fees and insurance are $241/month. So my cost per month is $861 per month.

I am getting 1400/month rent on this property, which is the going rate for a property of this type in my area (I did tons of research on rental prices).  My profit (not accounting for expenses are $539/month).

I would love to make as much as I could but I just don’t see how it can be done in my area, basically if you were going to have everything done, and have a property manager you would not make anything in my area.  This house I got sold for 240k in 2008 and should appraise for about 150k now.

My plan is long term, just looking for some extra income when I retire in 15 years; I plan to get 10 properties.

I just wanted opinions on my deal.

Thanks