choosing between deal options and capital us in Kansas city, MO.

[Ali Zantout]

Okay i have 2 deals I am looking at for my second investment property both deals are 30 year loan, the mortgage price includes insurance and taxes.. 

1)  first deal is 2 houses owned by one person that can be bought in a bundle, both priced at $30,000, they were $34000 and price went down, but the mortgage is calculated on the $34000, its in low income community near 2 colleges in KC, they have tenants in them lease ends in 6 months and have a property manager in place. One is rented for $575/month that brings in $6,900. After mortgage and expenses I calculated for worse case scenario (575-(mortgage=300)-(expected expenses= 80)=195x12= $2340/year. 2nd house rented for $650 brings $7800. Again calculated worst case scenario ( 650- (mortgage=300)-(expenses=80)=270x12=$3240/year. Both per year bring $5580/(expected I put 20 percent down for each plus 2000 for inspection/appraise and some closing cost) (2000+12000)=39.8% cash on cash! so in 3 years I would make my money back and more. 

-opinion= Get 2 houses with tenants there rent might be raised for the $575,both houses were remodeled in 2016, new furnace in both places. 2 houses kinda scared to have if its too much this early for me, holds more capital than I want, but cheaper and management already in place. If I exit in the future might just break even or get some profit.

2) second deal is single family 3 bedroom at $49000 %15 percent down, same area near the college rented at $700 that brings $8400, tenant lease is month to month. I got numbers done on this (700- (mortgage=385)-(expenses=80)=235x12=$2820/year. So 2820/(%15 down + some closing costs) (7350+1000)=33% cash on cash return, so 3 years I would get my money back.

opinion- less capital to put in, more money at the end if more stuff goes wrong, but 1 house and will have to wait longer to get the third property. if tenant moves out I can rent out rooms for college kids even if its 400 a room for the 3 bed. thats 1200 which makes it better deal. would be less stress to manage, but dont have any recent maintenance on this place yet. On exit might break even, but might get the house in low $40000.

Wanting some experienced  advice from investors. I am doing the buy and hold for passive. Both deals are great, just hesitant to pull the trigger on one of them. Thank you guys.

[John Leavelle]

Howdy @Ali Zantout

Do you have any investment criteria established yet? Like minimum Cash Flow per unit or Minimum CCR percentage? If not I strongly recommend you do. Neither one of these deals would meet my requirements.

$80 per month for expenses? I think you need to provide more detail. This seems extremely low. Does it include Vacancy, Property Management, Maintenance, and CapEx?