So I have been wanting to invest in real estate for a while now, as it is part of my retirement plan. Been waiting for a good time and have finally decided to pull the trigger. Worked quite a few numbers, and found a home that I am about to put an offer on. Well untill yesterday that I was doing a bit more reaserch and found this 2% rule and 50% rule. Now I don't know... With those rules it is impossible to buy a house in this area. Also, I am seeing that the 2% rule was made back when interest rates were double what they are now. So I am looking to get some advice and see if I should go ahead and pull the trigger or back off before it's too late.

The house is a 3 bd 1.75 bath. 1880 Sq ft. Nice home, half carpet half hard wood. Been on the market for over 200 days. Asking price is 157k. They currently owe 123k on their loan. I am using a VA loan so no down, awesome interest rate. I will be asking them to pay for about 10k in closing costs so I figured 135-140k would be a decent offer as I am not willing to go higher than that. Also the average price for such a home is 150-165.

Having done my homework on rental prices the best I can get is about 1050 for that place if I want any chance of renting it out. So the math comes out as this:

For a 140k loan at 3.5% average
629 P&I
131 taxes
67 HOI
-----------
827 Total a month

That leavs 223 a month for Property management (105 a month) maintnence, profit, vacancy and what not.

That makes is kind of tight. I will be living in the property for about 7 months which will give me some time to put away about 6 months of mortgage. (Whis is what I think I should maintain at all times for vacancy and repair purposes)

I can look at this two ways, 1. (the way most of you might look at it) I have a pretty decent chance of having to put some of my money in to this property to keep it afloat, not a lot but still an amount. Or 2. I don't have a cash flow but hey even if I put in 100 bucks a month in to the property Im getting a 140k house for 100 bucks a month that some one else is paying the rest for. In the long run I am still getting a pretty good deal on it.

A little background. I am in the military so I will not be able to buy all my houses in one location, so they will be spread out as I move around. Figure I wll live it the house for a few years then rent it out instead of selling it. The town I am currently looking to buy in is a VERY small town whos whole economy revolves around the base. (Currently a potential location for the next FAA UAV test site which could more than quadruple the population and bring billions to the local economy over the next 10 years but who knows if they will select this as their next location) And lastly I do not have long to sit on this since I will be moving out of the location in about 8-9 months and want to be out of my current rental by the end of my lease July 31st. As well as living in the house for a while before I rent it out to give me time to acumilate my 6 month buffer. The current location is probably one of the best chances I will get at buying my first house since it is a fairly cheap market compared to most other places I will get stationed (Such as San Diego where if I buy my first home there it will be 2-3x the cost and if it goes vacant there I will be in deep sh** while if this one goes vacant I can still keep my self afloat)

Sorry for the long post but its the only way I could paint the full picture so that I can get the most relevent advice on my current predicament. Thank you very much for all of your help and time.