All my eggs in one basket or multiple baskets

[Malcolm Lawson]

I currently own one rental that is cash flow positive and am looking to purchase my second.  I have about $70,000 in savings to play with and was originally looking to only invest part of that along with a loan to purchase in the $200K range.  Then I came across something that caught my eye.

I found a condo for sale in a small town right next to a military base asking $55,000.  It is in decent shape and I would only need to put in maybe $5,000 on new appliances.  I am confident I could get $900 a month for it.

Here are the numbers I estimated:

$900 rent

-$90 (10% vacancy rate)

-$45 (5% Cap X)

-$50 (Insurance, I have not got an actual quote on this number yet)

-$45 (5% repairs 

-$125 (Condo fee's)

-$79 (taxs)

Cashflow = $434

This type of deal was not what I originally imaged but $434 cash flow looks pretty good to me.  Currently, my money is just sitting there depreciating in value due to inflation.

Here are the con's that I see.  1. Almost ALL my savings will be gone into this one investment so I probably wont be able to buy my third property for a long time  2. I won't be taking advantage of debt pay down with a traditional investment property 3. I won't be taking advantage of these ridiculously low interest rates.  

What are your thoughts on this deal?  Should I put all my money into this one small deal?