Am I on the right track with this property?

[Robin Valadares]

HELLO BP COMMUNITY,

I just purchased my second single family rental property in St Catharine's. I was hoping to get some advice if I am setting up this rental properly in order to maximize my ROI and cash flow.

Purchase Price: 270K

Option 1:

Market Rent 1450-1700

Use 20% for down payment from existing HELOC, interest is at prime + 0.5%: payment: ~ 140$ per month

80% conventional mortgage at 5 yr fixed at 2.9% @ 30 year amort: 900$ per month

Property taxes at 203$ monthly

Insurance @ 100$ month

5% vacancy

10% property management (I'll be managing it myself)

10% Cap Ex

 Cash Flow Summary: 1600 rent- (140+900+203+100+80+160+160)

= - 174.3  a month

Option 2:

Everything same as option 1 but use my own money for down payment.

Cash flow becomes -34.3$ a month

Option 3:

Either increase my HELOC down payment or personal down payment to 25-30% in order to increase my monthly cash flow.

I'm thinking option 1, I believe the market rents will increase in time and I know since I am managing it that I will save the 180$ monthly

I want to know if I am missing anything glaring? 

I'm looking to purchase more properties in the coming months so having access to cash is very important but at the same time I do not want to be experiencing negative cash flow.

Thanks for your advice!

[Kevin Siedlecki]

@Robin Valadares. It looks like in all of these scenarios you are losing money, but you've done the math and know that. The only thing you might be missing is the structure of the HELOC payment. $140 looks like the interest-only payment. Eventually you will have to pay back the principal, too. It seems like you are relying on appreciation and rent increases to make this deal even break even over the long run. That's a risky play!