First rental property decision advice

[Stache In Training]

I am hoping to get into the real estate business, and hoping to get some advice/math checking.

I live in a college town, so the rental business is usually pretty strong.  I have an opportunity coming up on a duplex entering the market.  It's a small little house, but well taken care of.

Info:
New Sewer line in 2002
New furnace, 90% efficient, in 2003
Basement apartment constructed in 2004
New roof in 2008
Interior rooms and exterior trim painted in 2013
Includes, 2 refrigerators, 2 apartment size ranges, 2 clothes washers and 2 dryers.

Income:
Two bedroom upstairs- $755  Currently leased until July 31, 2015
One bedroom downstairs- $465  Currently leased until July 31, 2015

The tenants have not been given access to a small garage.  The current owner uses it to store some lawn care stuff and overflow from their garage. Potentially another $50 –$75/ month.  New concrete floor in garage and driveway done around 2007.

Total- $1220/month, $14,640/Yr

Current Expenses (Annual)
Owner pays utilities, not easily split in this property.
Electric- $1340
Gas- $450
Cable- $859  Current owner not completely kosher on the cable here.  They only have one service and its split between the tenants.  This was a remnant from when their children lived there.  Might just make tenants responsible for their own cable in future leases.
Mun. Serv- $1230
Insurance- $488
Taxes- $800
Management- $732
 
Total- $5,899 - I'd be taking out the Cable and Management expenses, obviously.  If they want cable, they can pay for it themselves, and I'll have Optimum split it correctly.  So takes total expenses to $4308.

So net income would be 10,332 (14640-4308).  The price of the rental is listed at 137900.  So that would make the mortgage payment a max of 802 per month (9624/year) on a 30yr mortgage at 4%, with no down.

So while there shouldn't be too many repairs, since it was taken good care of, that only is a max profit of $708 a year.  Right? or have I done some math wrong? Obviously I can always try to lowball, and get it for cheaper, which would increase profit, but that just doesn't seem like enough of a profit for the heartache.

Please weigh in with your expertise, and let me know what other info you need. 

Thank you, in advance!

[ncornilsen]

Add in maintenance and vacancy and you'll have negative profit.

[waltworks]

Yep, crap rental. Unless you can massively raise rent and/or get tenants to pay utilities... no way would I buy that. Any kind of minor appliance problem or maintenance costs will eat your entire profit immediately.

-W

[thedayisbrave]

I don't even crunch the numbers of a rental unless they meet the 1% rule right off the bat, which is monthly rent should equal (or preferably exceed) 1% of the overall purchase price.  Yours doesn't, so that's where I would have stopped.

[Stache In Training]

Thanks guys, I thought this was not good.  and the 1% rule is a very good rule of thumb.  Thank you!

[arebelspy]

You're asking the right questions SIT.

You'll need to look into a lot of properties to find a good one, but keep digging; it's well worth it.  :)