Does this investment property make sense

Question

Hi

New poster to the web site. I wanted some advice on a investment property

Details - New Construction (the community will have walking trails, dog park, tot lots, club house).
Price - 329,999
Down payment - 130,000
Comparable rent per month - 22,200 per year
Property taxes - 4000 per year
HOA - 1164 per year
Excellent credit
Tax Bracket - 28% federal
Already own another townhome for investment and have 40% equity on that town home. No other debt with primary residence fully paid off

The town house is next to a town center which is slowly expanding and most of the big stores will start moving in soon (Sams, Target etc) and construction in the area is booming with lots of homes under construction. There are also a lot of houses available for rent in and around the area

Not sure if this is a good investment. Any advice would help

David T · Answer

It depends what you are buying it for. If you are buying for cash-flow or as a long term rental, then I don't think it makes sense. Putting a large down payment to make it cash flow or break even is not a good idea in my eyes. I like to look at properties and how they cash flow with only 20% down as that is the most that is typically required for an investment property in my area. If you think this property will appreciate in price in the near future and are looking to unload it, then it may not be too bad depending on what YOU think is worth paying per month. If it were me, I would not buy it as I look for long term buy and hold investments rather than appreciation in a few years.

Scorpion Sting · Answer

Would prefer to stay anonymous. I wanted to get a sense of the numbers. The property is a new construction and it is about 1500 Sq Ft. The area is booming and hence a lot of construction. Target market is a couple starting a family. The house is close to a commuter bus depot. This house is comparable to the houses that are being built in the area with most of the construction being town homes and condos. A recent house of similar size and sq ft rented out for 1750. Thinking of renting out for 1850 and also allow pets. Any thoughts on the numbers would help

Karen Margrave · Answer

@Scorpion Sting Welcome to Biggerpockets. If Scorpion Sting isn't your given name, you might want to consider using it instead. It will help you building business, etc. I'd also like to suggest you upload a profile pic of yourself (makes it more personal) If for some reason you don't want to use your own pic, maybe one of a local landmark, hobby, etc.

As to your question. The one thing that you said that concerns me is "there are also a lot of houses available for rent in and around the area". My question would then be, how do those compare to what you would be buying in the way of age, square footage, rents being charged, location, etc.? How are home prices, holding steady, appreciating or ? How much are you planning to rent the unit for?

What is the local economy like? High unemployment, low? Who is your target market?

There's so much that goes in to figuring this stuff out, the more information you provide, the easier to give you an accurate answer.