Student Housing - Good Deal?

[Josh Gaddy]

Ok Gurus,

I think I found one.

It is a student housing condo 2 bed and 2 bath with large living area and less than 1 mile from University. It needs carpet cleaning, paint, and stacked washer dryer. i can buy used. It was built in 2003 so Im not too worried about huge HOA hit.

It will rent for $700-750 w/o utilities and $800-850 with utilities per other renters in the complex.

If I can put $5K down and get a 6% interest rate, my monthly expenses will be as follows:

HOA $143
Debt Service 305
Insurance 15
Taxes 100

TOTAL $563

With $700 rental, I have $137 monthly left. I input it into the cashflow analyzer that was on this board and the depreciation turned the deal negative. Could someone explain the "add backprincipal" and depreciation on lines 28 and 29 of that document? Does this seem like a deal that would work?

I know it doesnt work with the 50% rule, but it seems to be a deal that would cashflow. I am a recent student and I would have lived there for the price I stated in rent. Also, I think I could get out with much less than $500 per year in maintenance.

Also, there are elderly people who live in the complex and i am on the first floor. A good senior rental possibly as well. Which I would obviously be much more interested in!

Thanks gurus. Pick it apart!