Hello, everyone. I've wanted to get into investment properties for some time, but am finally looking to make the switch. I just wanted to run some numbers by everyone and get feedback on if I'm missing anything.

First, what is prompting this decision. We have purchased a new home that will be our primary residence and initially wanted to sell our first home. We're in an area (Indianapolis suburbs) that has been particularly hot. I purchased our home five years ago for $150k. Homes in our neighborhood this past spring to summer sold for between $200k and $250k. I expected our home to go somewhere between that range, which is where it's been listed. The market has slowed with the fall season and our home doesn't have the latest updates, so it's not sold yet. I think we'd need to drop the price down to $200k most likely to get movement at this point. And that's just lower than what I was hoping to get and lower than comps in our neighborhood. That being said, our home is very basic and is set up well to be a rental property (clean but nothing fancy).

So we've secured financing for both the existing home and our new home and will still be in the area (close enough to manage the property ourselves). Here's the math I've come up with:

• Remaining mortgage amount: $136k
• Rental income: $1400 (this is right in the middle for our area), $16,100 less vacancy allowance.
• Total annual expenses: $4721 (29.32%) This is low, from what I understand. I used the 1% rule for repairs/maintenance and it's in line with my own repairs since I lived here. The 50% rule would put it much higher, obviously and would create a negative cash flow. So expenses are somewhere I'm looking for someone to speak up if I'm way off. I also didn't budget for gas and electricity utilities, because I assume that for single family homes, the renter would pay those. So those expenses are based on the following:
  • Taxes: $1,700
  • Repairs and CapEx: $2805
  • Sewage Utility: $60
  • Insurance: $866
  • HOA: $100
• NOI: $11,379
• Mortgage: $9,345.12
• Net income after mortgage: $2033.88
• Cap rate: 8.37%—I calculated the cap rate based on my current mortgage amount remaining, since this isn't a new purchase. I hope that's right. 

These are the numbers I've come up with. I'm still not 100% decided, but will be deciding this week. Of course, if we drop our price to the $200k range, I expect it will sell. But like I said, I was hoping for a higher amount and if anything else, waiting until the spring should have a positive impact on the price. 

Any input would be appreciated, thanks!