Condo as a rental?

[M Lindgren]

I've found a condo foreclosure that was built in 2003 and sold new for $135,000. The current asking price is $24,500.

Assuming I can't get people lined up all day long to pay $850/mo, is there any reason not to buy this property.

Taxes=$2K/yr
Asociation fees-$100/mo.
Insurance=$50/mo.
H2O=$50/mo
Mortgage (if financed)=$100/mo

Just not sure how you guys feel about having the HOA fees.

[Jon Holdman]

"Payment" is just P&I. It doesn't include taxes or insurance. Taxes and insurance are included in the 50% set aside for expenses.

In IRS terms, taxes, insurance, and a bunch of other stuff are "operating expenses". Subtract those off the actual rent received and you get "net operating income". Then you subtract off depreciation, which could be for the property as a whole as well as individual capital items, and the interest you paid and you get the taxable income.

Strictly speaking, it would be better to use the term "debt service" rather than "payment"