$630K for $3700 in rents? That's terrible for a rental property. I assume you would manage it yourself. I also realize HI has very mild weather (other than hurricanes) so your maintenance might be lower than in other locations. OTOH, if this is close to the ocean, that will create other maintenance issues. So, let be EXTREMELY optimistic and put your expenses at only 35% vs. the usual 50%. Part of that reduction is for the mild climate, part is for the self managing. You also get a break because you have one tenant who's a complete deadbeat about paying the rent, but is otherwise a great tenant (that's you!) I'll also assume you manage to get OO financing for 5% and 10% down. Here's how this looks:
Rent: $3700
Expenses: $1295
Theoretical NOI: $2405
Lost rent: $1500
Actual NOI: $905
Loan: $324,000
Payment: $3043.78
Cash flow: -$2,138.78
Even if you rented the unit you're living in, its still a horrible deal:
NOI: $2405
Payment: $3043.78
Cash flow: -$638.78
Assume NOO loan terms of 20% down and 6% for 30 years. You need to be at $500K just to be break even with $100K invested. You need to be at $400K to be truly break even and at about $350K to be cash flow positive at 100% financing to the amount of $100/unit/month. With the down payment, your cash flow would be $726.
Usually the next response is that its impossible to buy anything for that price here. If that's the case, don't invest in real estate there. A property you live in is not an investment. Its an expensive doo-dad. At $600K, you're going to pay over $60K in fees as you buy and sell this property. Buy the cheapest place you can live with, the best place you can afford, or something in between. As a rental investment, this one is horrible.
That's not to say prices might not skyrocket in the next few years, and you make a mint on speculation. I think that's extremely unlikely, but it could happen.
