New member from NH, with an accidental rental condo in NoVA

[Kai G.]

Hi, I happened to get thrown into the real estate business mostly by chance (and I'm not really in very far). My wife used to work in the DC area, so after she rented a small 1br condo in Alexandria, VA for a year, the landlord put it up for sale, and we bought it at what I believe to be FMV with a bit of savings due to no realtor commissions.

Fast forward a year later (now), my wife found a job in NH, so we decided to giving renting the condo a shot. It's kind of a trial balloon, and I'm not exactly sure how we're doing, but we already owned the place, so it's not that we had much of a choice other than renting or selling.

If anyone wants to criticize the deal, I'd be glad to know your opinion. It's far from the 2% (or even 1%) rule, though I kinda doubt that's possible in that area right now.

Purchase price: $179k + $4k or so in closing costs. $120k mortgage at 2.75% (5/5 ARM). It's now rented out at $1295 for a year. There's a lot of guessing on the expense side, but I suppose the rather substantial condo fees at least mean I don't have to worry about big repairs like roof or anything. We put about $2500 and some sweat equity into the property before renting it out (some flooring, new dishwasher, new water heater, painting, etc).

income: $1295

expenses: $108 vacancy (guess), $283 HOA fee, $161 property tax, $14 insurance, $130 repairs / updates (guess), $480 mortgage

cashflow = $119

And that doesn't take management into account, which so far we'll try to do ourselves (from NH -- I know that's iffy, but we did find a high quality tenant so we're hoping that not too much will happen). We're hoping that we can manage to get tenants to turn over in the summer, where we can spend a couple of weeks down in DC combining a little vacation in the place with fixing things up and finding a new tenant).

Of course I made some mistakes already, too, but I think I'll get away with them this time...

So after getting my feet wet, I've been reading about REI, and we do have cash / equity (our primary home is just about paid off) to stuff with, so now I'm considering to get into it in a non-accidental way, and it seems more prudent to look at our local area (NH seacost), but it turns out I have little idea about the purchase/rental market here, and it doesn't seem all that easy to find out (in NoVA, at least, there's a very active market, while here prices seem to fluctuate wildly for no obvious (to me) reason. I read that NH has a rather tight rental market, but I certainly don't have a clue yet how find properties that would make a good buy-and-hold deal, it seems difficult...