Is this a good rental?

[Account Closed]

Hello Bigger Pockets,

I always enjoy getting over people's feedback regarding evaluating a deal. Please see my notes below regarding a potential buy and hold property I am evaluating. 

House:

4 bedroom/1.5 bath, split level, 1720 SF, built in 1968 on .25 acres in good neighborhood, listed for $119,900 in New Jersey. 

Previously sold in August 2006 for $240,000. Going onto auction.com next month actually. I haven't gone through the details of auction.com, if there is a reserve price, how you can finance it, etc.

Anyway, the numbers are more important. Even if I don't get the house, I would appreciate feedback for analytical purposes.

Target price: $95,000

Renovation Budget: $5000

Closing Costs: ~2%

Equity Investment at 10% down (because this was a fannie mae homepath home)

10% = $9592, closing costs at 2%, $1918, renovation $5000, total equity in deal $16,810. I would put in ~$2500, outside investors ~$14,300. 

Have interested investors and want to scale rental portfolio so going to do 15%-20% equity of my own and then 80%-85% investor equity at 8%-10% APR.

The projected rent is $1650/month based on comps, with tenant paying utilities. 

The real question is why is this house on the market for $119,900 when you could pretty much move directly into it. I could put $5000 through a backyard fence, paint, carpet, and clean up the kitchen. The reason its been on the market for about a year (in my opinion) and the broker I spoke with, is that the house while on a corner lot, is positioned in a weird spot on the lot with a very tight backyard. I think the yard is ok, but most of it on the side. 

Revenue:

$1650/month (assuming 1 month vacancy/collection loss) for year 1

Expenses:

Mortgage: $518/month assuming 30 year fixed rate mortgage at 4.25% 

Taxes: $4300/annually (could probably appeal lower)

Utilities: $75/owner pays water and sewer 

Insurance: $75/month

Repairs: $1000/annually 

Outside Investor Equity payback: $115/month (estimate)

Net Operating Income: $426/month, $3460/annually 

Cash on cash return: 20.58%

2.0% rule: 1.60% (very high for deals I've assessed in NJ that aren't $40,000 run down and need $15,000+ of work)

Unlevered yield on cost: NOI/Total capital cost $3460/$103,138 = 3.35%

Levered yield on cost: NOI/Total equity $3460/$16810 = 20.58%

Could probably refi it after it appraises for more than $150,000+ and get 75%+ LTV, all my cash out of the deal, but then have a higher mortgage payment so less cash. I don't want to over lever.

I know I'm trying a ton into this but just want to hear others thoughts. Thanks.