First Property Analysis

[Matt Hummer]

Hello All!  This is my first post although I've been reading here and there on the forum.  I'd like to get some feedback from my first property, purchased in late 2012.  It's been 3+ years and I still think it's a good deal but I'd like to get some second opinions.

The property is a 3/2 SFH, split plan with attached two car garage on a cul-de-sac in a small neighborhood near Pensacola Florida. The home was foreclosed and I purchased it for $92,000 with a VA loan (at the time I was planning to move in). Origination and all fees were included in the mortgage; I put nothing down and I lived in the home for several months before being forced to move. The total amount financed was around $93,500. We closed in October and after making approximately $4,700 in repairs I moved out in January 2013.

I hired a property manager.  50% initial listing fee, 10% monthly management fee.  The house rented in April 2013 for $925.  The first tenant remained for two years.  When he moved out the house remained vacant for 6 weeks.  The second tenant moved in and rent was set at $1,000.  That tenant is still there today and just resigned a 12-month least last month.

The breakdown:

Financed amount: $92,500

Repairs: $4,700

Monthly Mortgage (PITI): $580.65 @ 3.75%

Gross Monthly Income: $1,000

Less PM Fees: $100

Less maintenance, average 2 years: $17.50 ($400 total over two years)

Net monthly profit: $301.85

Yearly @ 75%: $2,716.65

Yearly @ 100%: $3,622.2

Cap: 2.9% (calculated with 75% occupancy)

Questions for discussion:

1) Yearly net income relative to purchase price seems low but profits compared to cash outlay and monthly gross income looks pretty good.  What metric would you evaluate this property with?

2) All profits are before taxes.  What tax structures would some of you use to minimize tax loss?

3) With an estimated current sale price of $116,000, would anyone consider selling this?  Since I've held the property for almost 4 years but I haven't lived in it for the previous two, what tax ramifications would I see?  Current value of mortgage is $87,800.

4) What other parameters are valuable to share when asking for advice?

Thanks in advance,

Matt