All my eggs in one basket or multiple baskets
I currently own one rental that is cash flow positive and am looking to purchase my second. I have about $70,000 in savings to play with and was originally looking to only invest part of that along with a loan to purchase in the $200K range. Then I came across something that caught my eye.
I found a condo for sale in a small town right next to a military base asking $55,000. It is in decent shape and I would only need to put in maybe $5,000 on new appliances. I am confident I could get $900 a month for it.
Here are the numbers I estimated:
$900 rent
-$90 (10% vacancy rate)
-$45 (5% Cap X)
-$50 (Insurance, I have not got an actual quote on this number yet)
-$45 (5% repairs
-$125 (Condo fee's)
-$79 (taxs)
Cashflow = $434
This type of deal was not what I originally imaged but $434 cash flow looks pretty good to me. Currently, my money is just sitting there depreciating in value due to inflation.
Here are the con's that I see. 1. Almost ALL my savings will be gone into this one investment so I probably wont be able to buy my third property for a long time 2. I won't be taking advantage of debt pay down with a traditional investment property 3. I won't be taking advantage of these ridiculously low interest rates.
What are your thoughts on this deal? Should I put all my money into this one small deal?