Option A: Home purchase for $150,000 with 27% down (40k)

Expected Rent: $1,250

PM fee (10%): $125

Mortgage (including HOA, Insurance, Taxes): $1,085

Profit per month: $40

- Tax deduction / property depreciation

- Equity build up / long term rental & rent increase

- Good area that is expected to really grow over the next decade.

Additional expenses left out above:

Vacancy: $125

Maintenance: $125

CapEx: $125

Average real monthly cashflow: -$335

Your PITI&HOA number is very high for the purchase price. I'm not sure where you are- in some areas, insurance is relatively high, in some, taxes. I suspect the HOA is a big reason why this particular property does not work.

Is there a general percentage after all expenses (PM fee, mortgage, maintenance) that I should be looking for in a rental to be profitable?

The percentage that works for you in your area is going to depend on the details. Use a calculator like this:

http://www.calculator.net/rental-property-calculator.htmlFind out what your typical landlord insurance is for your target properties in your target area. Look up what your property tax rate is. Assume your management, maintenance, capex and vacancy will each be 10% of the rent per month until you have hard data otherwise (ex: you take a local real estate investor with fifty properties out to lunch and get real numbers from him/her). Find out what the HOA fees are, if any, in your target neighborhoods.

Then take all the data you gathered along with the calculator and start running the numbers on a ton of properties available for sale, or even better, the sold prices, for those neighborhoods. Make a spreadsheet with a tab for each neighborhood you like. Track what you could expect that your income per month/cap rate/IRR/your favorite measurement on those properties to be. Then decide what your personal goals are for property profitability- $200/door? 10% cap rate? 12% 14%? You'll probably prune out some neighborhoods during this process.

Now, you can run the numbers when every new property comes on your radar. Take a few minutes and plug it into your spreadsheet. Pretty soon you'll know as soon as you see the listing generally what the property will make.

Yes, all this will take a little bit of time. But it's a lot of money you're investing and personally, I think it's worth a little time to figure out what is best for you in your area. Not someone with C- $15k houses in Ohio whose 2.5% rule or bust. And not someone with A+ properties in Hawaii with no HOA and 0.25% property taxes where 0.7% will do the job.