Am curious what folks think of following deal...

[Arjun K.]

In an area that can appreciate north of 2%/year and really do 2-4%/year for next couple years (area was flattish for a couple years and surged 8% last year.. not a lot of room to develop further in a growing metro area).

$206K purchase price. Will need $8K work. Targeted rent $2,000 (could be $2,050-$2,100). 3.75% mortgage with 30YR fixed and 20% down. 2.7% property tax rate. Property being created at $85/ft.. . arguably worth $85-90/ft. Clean property in otherwise good condition.. won't need new roof for 5 years. Intended to be a long-term hold.

I like it, but I'm curious how this stacks up in the world.

[Scott W.]

how many people are going to rent for $2k? it's just not going to happen.

look for the "sweet spot." i'm sure you can find something cheaper than cash flows better & a better return on your $.

3% return on your $ is just not worth it. and the principal would be low if you're taking out a 30-yr fixed rate.

run, don't walk, from this deal.