This is what a real estate cashflow analysis looks like. It informs you of your up-front costs, assesses cashflow positivity with current and potential future scenarios, budgets appropriately for vacancy/repair/contingency and accounts for overhead costs even if they may be unrealized (e.g. property management, accounting, bookkeeping, etc.). It is also vital to highlight any assumptions and verify them in writing, absolutely no exceptions.
I perform 25-50 cashflow analyses every week. I make offers on less than 1% of the properties and have my offers accepted before I even see the place (with a condition that I like what I see when I do). Realtors contact me with properties that are being listed so that I can close on places that meet my criteria before they even hit the market and anyone else has a chance to bid.
In this scenario the cashflow is +$128 per year but increases my net worth by $39,351 each year in the present scenario. In the future if mortgage interest rates rise (as they inevitably will) and appreciation slows (which it inevitably will) I would lose $6,300 / year in cashflow but still gain $16,709 in equity. I’ve passed on this opportunity, there are much better out there.
Welcome to 2015! If you’ve been procrastinating on taking control and achieving your dreams, don’t wait for tomorrow; start today!