Newbie looking at first rental property

[Charles G.]

Objective: buy a single family condo, least down payment, reasonable return on cash investment, hold for at 5 least years. 

Is this a good investment: 

2 bedroom, 1 bath, ground floor, good condition (all the appliances work, carpets and interior in good shape (move in condition), value of unit in range of other units in area, good demographics for renters, HOA's reasonable and condo association financials are good, real estate taxes could be argued down the road, probably overestimating closing costs.

• Negotiated price $57,000
• 20% down or $11,500
• Mortgaging $45,600, 30 year, 4.75%
• Closing costs $6,000? max
• Yearly rent $11,400 (assumes 8% vacancy), easily rentable $1,000 per month
• Expenses are $7853 per year: $2,854 per year principle and interest, $500 insurance, $2,339 taxes, $1,860 HOA's, $300 sewer

NOI = $3,186.00 per year

I'm looking at this in terms of Cash on Cash return, what I put into it vs. what I net out. For the moment I'm not looking at future value or the net affect of the income or loss on my Schedule E.   Simply looking at it compared to what I could make in other investments. 

$11,500 down payment plus $6,000 closing costs = $17,500 out of pocket. 

NOI $3,186/$17,500 = 18.31% the first year.

Looking at it over 5 years with the closing costs spread out over 5 years the yearly return is 25.29%

Is this a good investment?

[Joseph Ball]

Looks OK, but here is the big thing. You are planning to do something-to make an offer. So many people talk about investing all day long, but never act. 

Take action. Make mistakes (and profits). I really liked your post. You are taking action.

Soon, you will be a GURU! LOL