Peter,
On the surface, properties with a 180 to 200K price tag and 1400 income, won't make much, if any money. You might get some on appreciation, but that's a big gamble.
Banonsic rules of thumb:
1% rule: The monthly gross rental income should be 1% of the price of the property... so on a 180K property, your monthly gross rental should be 1800 per month. 1400<1800 so, no, it doesn't make the 1% rule test. To make the rule, the price needs to be at 140K or less.
50% rule: 1/2 of the gross yearly rents divided by the cap rate should be equal to or greater than the price of the property. 1400/2 = 700812=8400/0.08 = 105K. That says that the value of the property that generates 1400 per month needs to be right around 100K. The 180-200K price range lies outside, so this test fails as well.
These are only screening tests... but they are a pretty good indicator of potential success.
Things to do:
1) Keep an eye out for properties that you can buy below the current market level. Any repairs must be subtracted from the price.
2) Find a close by market where the rents and house prices match more closely.
3) Buy multi-unit properties.
Searching BP will help you come up with a whole list of other strategies.
Good Luck!
Jim
