What am I missing?

[Joshua Feit]

Hello BP!

I am interested in purchasing a single family rental. (I already have five rental units, so I'm not completely new -- but yes, pretty new!)

The house I want to buy is a 3/2 on-market and I can get it for $65K. It currently rents for $850, which is under market for this neighborhood (market is probably $950).

With taxes, insurance, debt service, management expenses, 10% for maintenance, 10% for capital expenditures, and 10% figured in for vacancy, I'm calculating a current cash flow of $90 / month based on the $850 rent.

I know that's not stellar, but here's why I like it:

The neighborhood is one of those neighborhoods I really believe in -- it is minutes to downtown, and central to major redevelopment and transit projects in my city (Atlanta), and it may just be one of these hot neighborhoods that becomes one of the great places to live.

Right now, this is the cheapest on-market property in the neighborhood -- the closest comps are in the 85-95K range, and several flips (not comps, but nicer houses on the same block) have sold in the $200K range in the past month. Just yesterday, a lot came on the MLS for $58K one block over.

My questions:

1) I know this isn't an amazing return, but does it seem solid enough to go for it? Keep in mind this is mostly an appreciation play, with a little bit of cash flow each month.

2) If this is solid, why aren't several people jumping all over it? It's on the MLS and easy to find.

Thanks for your insight and assistance!