50% / 2% Validation...is this a good deal?

[Petit Morne]

Hi,

I have potential to buy a condo that rents for $450-$600 per month now for $20k. I'd like to know if this deal pans out:

Gross Rents: $500 per month (average)
Operating Expenses: $250 per month
NOI: $250 per month

Mortgage Payment: None because I'm paying cash (or should I try to get a LOC for this $25k instead and keep my cash???)

If I got a loan I'd put down $5k and get $20k loan @ no more than say 9%
($20,000, 15 yr, 9%) $202

Cash Flow: $250 per month if I pay cash.
Or $48 per month if I put $5k down and finance the rest.

So I have 2 questions here:

1. Does this unit pass the "rules of thumb"?

2. Cash seems better to me but does anyone think I should try and do the finance option at all?

PM

It looks to me like this is a good deal.

Good Luck,

Mike