Hey there, I live up the hill in Flagstaff and own several rentals. It makes sense if you are going to get a decent yield on your investment. how much is the condo worth? how much cash would you walk away with if you sold it , after commissions and fees and paying off the mortgage? If you invested that money into something else would you beat the yield you would be receiving from the rental (cash-on-cash)? I typically try to reach a yield of 8-10% on each new rental property when I buy it. You should strive for a better yield than you would get from a passive investment because there is extra work involved and the investment is illiquid. I factor that one month's rent will go to repairs and maintenance. so I get eleven months rental income. I discount the appreciation of the property as I buy each rental with a 'forever' hold timeline-- any equity I build in the property is just gravy. Of course, every several years I re-run my formula to see if it makes sense to keep it or not.
here are the numbers on my most recent purchase:
3 bed house in Flagstaff:
243,000 purchase price
down payment 25% = $60,750
$5,780 in Settlement charges to buy house including 450 dollars in home inspection and repairs before renting
Total investment= $66,530
HOA is 225 per year
Mortgage P/I/Tax/Ins = 1023.85
Total expenses per year = $12,511.20
Rent is 1685/mo X 11 months = $18,535
Net income = $6,023.80
Yield on this Property = just over 9% (net income of 6,023.80 divided by total investment of 66,530)
and of course I will be building equity in the property as the mortgage gets payed down and the property value increases, but the property values are a variable that I eliminate from my equation--I can't predict them so I eliminate them, let's assume they never change or at the very least keep pace with inflation, any more than that, then sweet! Too many people have been burned in the past hoping to time the market and sell high, I am not a wizard, so I am concerned only with cashflow...
Hope this helps!
Scott