Trying to make my first deal work

[Riley Bullert]

Hello, 

My husband and I are about to make our first rental purchase (which seems like a good deal) but when I run the rental calculator I run into a big problem in terms of variable expenses. The house is a brand new build, so in theory variable expenses should be very low. The home is a 3bed 2bath Single family home in CA, and we are hoping to get it for 240k-250k. We are related to the builder who is happy to sell to us drastically lower than the market price, which is what we thought made the deal work. Rent goes for about 1800 for nearby comps. 

If I were not to take into account CapEx or significant variable expenses cash flow is about 100-200$/mo and if we use the percentages recommended in the calculator it changes drastically to about -200. However I am SO new at this and don't want to make a grave mistake in not taking into these factors.

Would greatly appreciate any insight on calculating home expenses on a new build rental. 

[Steve Vaughan]

Quote from @Riley Bullert:

3bed 2bath Single family home in CA, and we are hoping to get it for 240k-250k. We are related to the builder who is happy to sell to us drastically lower than the market price

I buy singles In my market for equity capture and control.  Long-term plays. Most are break-even or a little positive on the cf front. 

What does 'drastically lower than market price' mean?  If you guys have the experience to self-manage and the income through your jobs to support this, a nice house in a good area could change your life 5 or 10 years from now.   

Cash-flow from nicer houses is just lunch money.  The equity capture and growth over time are what move your needle.