$17,000 House Do you think this is a good one?

[John Levora]

Here is what I am looking at a single family home which will be a cash deal $17000 and about $3000 to have it ready to rent. Management fee is 10% including tenant placement. $1350 a year taxes and $600 for house insurance. it should rent for $525. What do you think?

[Steven G.]

I don't like it. Your formula does not factor in maintenance (e.g. one big repair such as a new roof could eat an entire year's profits or more), vacancy, evictions, etc. And being only $525 a month rent, you're probably dealing with a lower income part of town (just guessing)....and those properties tend to be higher maintenance and also have higher tenant turnover. And also, the taxes seem a bit high for a property that's only worth $20k (could you get them lowered by protesting them with the county?) Personally...if I could get $700 /mo rent for it - I would go for it - depending on the neighborhood.

$6,300 - Gross Income
$1,950 - Ins/Taxes
$630 - Mangement
$3,720 - Income Before Maintenance, Vacancy, Evictions, Etc