BiggerPockets

Two different analysis.

Value:
$140K
70% = $98K
fixup = $3K
max price = $95K

Rent:
Rent: $1400
Expenses: $700
NOI: $700
Desired cash flow: $100
Max payment: $600
Max loan: $94,926
Rehab $3000
Max you can pay $91,926

So, I'd say $92K is the max you should pay.

Putting money down doesn't change the calculation. You could always pay all cash, and be sure to have cash flow. But, you could still have a bad deal. So, do the evaluation assuming 100% financing to see if its a good deal. That's the same as paying yourself the same return on your cash as you're paying for the loan, and making the deal stand on its own.

Then, do a second (or third) calculation to evaluate your cash on cash return. In your case, you put down $10K and get back $100 a month. That's $1200 a years, or a 12% cash on cash return. Much better than CD's, but not exactly stellar for a risky, high-hassle real estate deal.

Both calculations are saying this is an OK, but not great, deal at the price you're wanting to pay.

I don't doubt you can get financing below 6%, but I do doubt you can get it for 10% down. Investment properties typically require at least 20% these days.

Exactly!

Historically, appreciation has just matched inflation. We're still in a dodgy period where who knows what will happen. I wouldn't predict anything buy continued volatility and uncertainty.

That said, I evaluate potential properties a bit more optimistically. For one, I think we do have some potential for forced appreciation in my farm areas. I'm looking to buy at similar discounts to the peaks. We didn't see the same peaks other places saw. We're about where I think we should be, adjusting for inflation. We have pretty good job growth. I'm willing to manage them myself and not collect anything for that. So, I use 40% for expenses (that's the "manage for free" piece) and I'm not going for any immediate cash flow (I have, at least for the moment, a full time job). Using those criteria (40% for expense, $0 cash flow), I get a max price of $126K, less rehab. That puts you at $123K.

OTOH, I saw your later post, and that looks like a better deal. If I could find deals like that locally, I'd buy those over this one.

Nothing wrong with having a mix of cash flow and speculative properties. Just depends on your goals. Mike's are immediate cash flow. Mine are long term wealth building.