Found a townhome in a great location of Pittsburgh that overlooks the city. They are asking $380k for the property and the sellers are willing to finance the deal with no money down and 4% interest rate. Motivated sellers, they have been trying to get rid of the property for 4 years.

The property currently has a tenant that pays $2500/month plus the utilities & water. Taxes are $6,823/year.

Is this a good first deal to jump on? Does anyone have advice on the numbers? Will it be enough cash flow for a first deal?

Everyone runs numbers differently so YMMV. But this deal would not work for me.

380k for 30yrs @4% is $1814 per month. That’s most of your rent right there.

Property tax is $569 per month. Insurance is $100 give or take, add $250 if you need a property manager, and most people subtract at least something for vacancy, repairs, and CapEx. The way I run numbers, you're -$733.

People do this in places like California where appreciation is factored into the long-term bottom line. If you love the property and have a spare $733 every month to pay for it then cool, but it would be a big roll of the dice.

Maybe there is room to raise the rent? Check the property on Rentometer. That, plus managing it yourself, and hoping the property is new build or at least significantly renovated already, could change the numbers to at least cash-neutral.

@Michael Tyler thanks for all the input!

I would be managing the property myself and the property is newly updated, built in 1999.

Would be used with seller financing, does that make any difference as well?

Seller financing is the same math as a bank, it's just more flexible. But the sellers are already against a wall at 4% and nothing down. The next step is dropping their price, which sounds like it's necessary. 

Built in 1999 makes it less risky. That's still twenty years old though, so you HAVE to include an inspection contingency in any agreement. Get an inspector in there (you pay, it's well worth it) so you can see what repairs might be coming due. A new roof is expensive. The HVAC system, the water heater, any little damages from twenty years of occupants that you wouldn't see, but an inspector will.

Without property management fees and dropping your CapEx/repair savings to flat $100 per month, that's still $333 negative per month.

Run comps to see if $380k is really justified, and if not you should negotiate a lower selling price. 

Or if you have strong income and $333 plus random expenses won't make you break a sweat, then okay. But if you're in that position, you should instead get a bank loan for a different property that cash flows. $380k buys you a lot in the Midwest. 

Back to your original question - I don't think this is a good deal if it's your first deal. It's speculative. I'd wait until you have a confident scope of the local market to make investments that hinge on future gains just to reach a positive cashflow.

I agree with Michael on this one...  not a good return.  But there is value in being able to walk into a deal with $0 cash in and a 4% interest rate which I'd imagine will not be easy to come by looking else where.  Are you capable of covering the mortgage months at a time?

@Glenn Carter What are your goals as an investor? This won't cash flow so if that's what you are after then definitely look elsewhere. Also since the house was built in 1999, have the roof and hvac been updated? If not then they are both on their last legs. I usually steer towards more cash flow at least on the first few deals that way you won't have to pay for expenses out of pocket. Once you get that base of good cash flowing ones and can sustain negative cash flow from the properties in the A class areas then you can venture into those. What part of town is it in? If it's in a super solid area then you can probably assume appreciation is going to happen but that's not a guarantee especially with us being at all time highs for home prices and due for a correction. Regardless I still would at least want to break even I don't think I would buy an asset that would be losing money every month in any situation. Especially since we aren't in an area like California or anything. 

In addition to the negative cash flow issues mentioned above the key point you made is that its been on the market 4 years.   In this overheated sellers market anything on the market over a few months likely is over priced or has some significant challenges.    Make an offer that meets your return goals even if its way below asking.  If they don't accept,  move on.