New to REI, Looking for advice

[BrokeAsA2LegStool]

I'm looking in to buying a rental property, most likely a condo or possibly a duplex and wondering what your advice would be to watch out for/look for. My goal is to establish myself as a landlord so that in two years time I can start claiming the income in order to secure larger loans and acquiring more properties. I want to establish a large cashflow with rental properties so in 10 years I'd be looking at $5000 plus cashflow per month. I'm 22 with a 630 credit rating, just getting started, and after speaking with a loan agent have determined I will qualify to buy a condo I'm looking at for 40k, with 5% down. The condo i'm looking at is 1700 square feet, in a descent area around Fort Worth texas, and it seems to me I can make around $250-$350 cashflow easily.

What should I be looking at?

For a 40,000 loan I'm assuming my mortgage payment would be less than 400, which i think is conservative, feel free to let me know if i'm wrong. With taxes/insurance (guestimating around 150 a month together) my total payment due would be no more than 550 a month, again, correct me if I'm wrong.

Other condo's in the area around 1400 sq feet are renting out for 800-900 and if I fall somewhere in there, maybe above, seems  to be at least 250 a month cashflow.

Is there anything else I'm not considering, or any advice you may have?

All comments welcome, thanks

Michael  

[WilsonTaylor]

Michael,

There are a few things that come to mind about using condos as rental properties that you need to look at.  

First, all condos have Home Owners Associations and therefore fees that come along with them.  HOA fees vary widely along with what they do for that fee, so read the agreement.  Some HOAs do not allow or restrict rental properties.  Again, read the agreement.

Second, Your estimate of $250 to $350 may also be high because you did not allow anything for vacancies and repairs and maintenence.  You should find out what the vacancy rates are for the area that you are looking.  Remember that even when the unit is vacant, you must still come up with money for the mortgage, insurance, and taxes, even though you do not have any money coming in.  

Good Luck in your investing
Wilson

[amusedtwinkle]

I would suggest 100% LTV due to most lenders do not like to go under 40K, not to mention it will give you a little cash in pocket for the unexpected, on that loan amount 95-100% LTV mortgage pymnt will not change that much.