Advice appreciated! - Negative cashflow but positive equity?

[Daniel Walker]

Hi Folks,

I am new to buying real estate for investment purposes, but have held a rental in which I used to live since 2014. With equity I've extracted from the first house I am looking at a 2-bed town house which has the following numbers:

Monthly Income: $1095	Monthly Cash Flow (income minus expenses): $-310.25
Monthly Expenses...	Cash on Cash Return...
Principal & Interest	$800.00	Down payment	$51,125.00
Tax	$80.00	Closing costs	$3,000.00
Insurance	$56.00	Washer dryer	$560.00
HOA	$205.00	Paint	$1,000.00
Utilities	$0.00
Vacancy	$54.75
Repairs	$50.00
Capital Expenditures	$50.00	Total investment	$55,685.00
Prop Mgmt	$109.50	Annual cash flow	-$3,723.00
Total Expenses	$1,405.25	% ROI	-6.69%

However if I factor in the equity that will be built because the mortgage is slowly being paid off then the ROI becomes positive. Should I not touch this deal with a barge pole? Or are there any of you who have gone ahead with such a purchase based solely on the equity gains?

I should add that I'm in the process of building a local network of acquaintances and contacts through this website and also face-to-face meetup groups. I know that this is a great way to become exposed to more ideas and options.

Advice / criticism / comments most appreciated!

Daniel

p.s. the formatting of the table above was not preserved when pasting into this forum. Hopefully it still somewhat makes sense.