Potential FIRST deal! Need your input please.

[Clint G.]

Hey there!

I'm getting ready to possibly pull the trigger on my FIRST rental property. This is a 3/2 SFH @ almost 1500sq/ft. Newer neighborhood (home built in 2006) in a highly desirable community with lots of upside for growth and an excellent school district. Homes have appreciated in value on avg of 19% in the past 3 years, so I'm keeping that in mind as I run these numbers.

The house is literally turn key. I will have to mop the floors and change the locks, that's it. My broker, who is also an investor, has two smaller homes (both 3/2's as well) on the same street and they only stay vacant for maybe two weeks when the time comes. 

Ask: $167k

Will probably offer $165k plus half of closing cost.

Cash out of pocket around $35k after 20% down and closing costs.

Rent = $1585/mth

Taxes and Insurance = $422

P&I = $791/mth assuming interest @ 6% but can probably get sub 6%

Vacancy = $126/mth assuming 8% of gross rent (broker/investor suggested 2.5% but I'm being more cautious)

Maintenance = $110/mth assuming 7% of gross rent

Monthly Cash Flow = $133

Yearly Cash Flow = 1,601

Cap rate = 6.73%

COC = 4.57%

I know those seem low but I'm keeping in mind the info mentioned above. I also would rather not do a huge rehab on my first deal and keep more money in my pocket for another deal 6 months or so from now. 

This will be a long term hold for me (at least that's the plan).

I know it's tough for you guys to make the call without knowing the area or my goals, but please throw your opinions in the mix. 

Thanks!