Investment opportunity or not?
A SFR is selling for $315k that a person plans on purchasing as an investment property. The individual is required to make an investment down payment of $63k (20%). Additional expenses include: $600 yearly insurance, $30 HOA, and $100 monthly management fees. Monthly mortgage payment for 30 years with 4.5% interest rate is about $1,400 (total monthly).
The property is currently being rented for $2,400 with an immediate positive cash flow of $1,000. Seller will not budge a penny on the selling price.
Is that a reasonable investment? Requiring 63 months for an investor to get his initial down payment back, plus chipping away a bit of the mortgage, and possible appreciation?
Note: Decent location with about 3-4% yearly appreciation.
Breakdown:
1. PITI & Management: $1,400
2. Rental: $2,400.
3. Initial Investment DP: $63,000 (20% of $315k)
4. Monthly Positive Cash Flow: $1000
Thoughts?