As for money for repairs, etc. we have an additional 10K liquid that would not be touched for a downpayment. The landlording issue I am less concerned about. First, we have 3 years to learn if we want to do it ourselves, but since we would be moving out of state, we would most likely hire a property manager or a local agent to handle in person work and inspections. Our friend is a property manager for several local properties, and I have 2 other highly rated recommendations if that does not work.
As for the rest of the numbers, I am aware that the properties do not fit the 1% rule and so in that sense the situation is bad. My question then is how are people making money on these properties? We looked at several duplexes that would rent for $700 each, putting the ideal cost at $140,000. These are selling in the 170K range, usually just short of asking, and a few that we looked at were not even finished inside (half remodeled no kitchen, no shower, etc). I have not seen a single residential property that is priced in that range yet they are being bought and rented.
We got some other advice that if we planned to live in the property for 3 years, rent for 2, and sell at 5 or so that would make sense. The gain would be in the appreciation of the property rather than in rental income.
Thanks for the reality check. I have been lurking for a while but it is so easy to get wrapped up in the detail of our monthly numbers and lose sight of the overall situation. Started to look at renting a bigger place and upset with the idea of paying $1000/month for a space we could buy and pay a $700/month mortgage on. Should not make business decisions when you are stressed in that way.