Need Help Evaluating Deal

[Toly Gins]

Hi,

I'm newbie investor looking to get my first deal and I need some help evaluating a property. I am a long time reader of the site, so I'm aware of the 50% rule. However, I haven't found much on evaluating townhouses and condos, since the HOA covers some of the maintenance that would be included within 50%.

I would like to qualify this by saying that I live in the bay area and SFH that are in decent areas are still too expensive for me to get any kind of cash flow. I am familiar with some of the negatives that people see in condos and townhouses, but the potentially lower maintenance along with the cashflow is attractive to me as a new investor.

Here is the deal:

-3 bedroom 1.5 bathroom townhouse
- short sale for 98,000k
-down payment 20k, investment loan for 79,000 at 4.3%
-HOA includes water, trash, hazard insurance and common maint. for $320 per month
-comparable rents in the area $1300-$1400

Analyses:

-50% rule gives $650.00 for all maintenance including property taxes.
- debt service is approximately $370.00
- this leaves approximately $280.00 in cash flow
- HOA fee is $320;however, how much of it should I include in the 50% maintenance?

If I count even half of the HOA within the 50% rule then it seems like this deal makes sense as I would still have about $120.00 in cash flow. Is this reasonable? I'm also counting the rent at $1300, which I feel is a very conservative rent as there are units in the same complex renting for $1400.

Any advice is greatly appreciated.

Thanks

Toly