Rookie needs help analyzing a deal

[David Johansson]

This is a 1 bed/ 1 bath condo in Riverside, CA close to many shopping centres and a big hospital. I'm currently living in it and the owner is looking to sell.

Property Value - $168K (roughly)
Downpayment - $32k (20%)
Closing Costs - $4k

Rent - $1350-$1450 per month (that's what other similar condos in the complex rent for)

HOA - $268 per month
Property Taxes - $170 per month
Home owner insurance - $50 per month
Repairs/maintenance - $70 per month
Property Management - $120 per month (roughly) 

Principal and interest - $550 per month (roughly)

Is this a deal? I always feel like I'm missing something.

[Scott Brewster]

@David Johansson

Have you used the BP calculators? I typed up a report real quick and can try and send it to you.

From a cashflow perspective, no. Your expenses are more than the rent would be even when I used 5% for all of your expenses and only 10% for property management. If you're buying it to live in, maybe? Depends on your goals. HOAs are a double edged sword. You don't have to deal with a lot of maintenance but they lean on the condo owners to pay for big projects (and can charge you additionally even after the monthly fee).

Being in Riverside, it might appreciate over time but in my experience condos and town homes really lag in appreciation compared to free standing homes.

Quick rule of thumb for rental properties is the 1% rule. If the rent is at least 1% of the mortgage you might have a deal and should consider it. 

Lets see if the report sharing link works so you can see what I'm talking about. Hope this helps!

https://www.biggerpockets.com/...

Additionally, Since it's Riverside you'll probably have very low vacancy, and if you manage it yourself you could potentially cashflow 200$ a month but that's like a part time job still. I had a condo that cashflowed nicely BUT every time I turned around the HOA needed more money from the owners so I never actually made anything off the darn property. Sold it 2 years later.