Rental property analysis

[Justin Clemmer]

I have only just begun researching real estate investment so I've been analyzing random properties for practice, and I came across one that seems really good to me but I'm wondering what I might be missing. I've tried to be conservative on all my numbers. Here's the property https://www.redfin.com/TN/Knox... 

Location: Outskirts of Knoxville, TN 37920. I think the area would be considered B class or maybe B-. Here's the Bestplaces page.

Purchase price: $205k

For simplicity and to be conservative I will assume this is the fair market value.

Down payment: $51,250 (25%)

Closing costs: $2500 I got this number by googling "average Tennessee closing costs", seeing $2366 and rounding up.

Rehab: $0. The property appears to be in turnkey condition. 

Total cash invested: $53,750

Rent: $2400. The property is 3 units: 2/1, 2/1, and 1/1. Nearby rentals on Craigslist are $895 for a 2/1, and $700 for a 1/1. That would suggest a total of $2490 but we'll round down. It should be noted that this property is much nicer and more recently renovated than these comps.

Vacancy: $192 (8%)

Property tax: $106. City website says $2.4638 per $100 of assessed value, where the assessed value is 25% of the market value which I'm using the purchase price for. ((205,000 * 0.25) / 100) * 2.4638 = $1262 per year or ~$106/month

Insurance: $100. I googled "average tennessee homeowners insurance" and got answers from $900-1100 per year. I will use $1200/year.

Maintenance: $120 (5%)

CapEx: $240 (10%)

Utilities: $100. Tenant pays electric (which runs the heat), and this thread suggests around $40 each for water and garbage. Round up to $100.

Total expense: $858 or 35% of rent.

Mortgage: $862.98. $153,750 @ 5.5% (conservative as I have poor credit) over 30 years

Cash flow: $669

Cash on cash return: 14.94%

So what do you think?