What will really eat up cash are the higher Expenses that are the result of the lower income tenants that you will have when you go into that price range.
But isn't the property quality/neighborhood (A,B,C) more important than strict price in regards to the quality of tenant?
I currently have a one property
worth x and another worth 3.5x in different towns but they are both what I would consider A-/B+. Tenant quality has been very good for both. Obviously the first property is bringing in a much higher rent, but the carrying costs are higher as well.
The new properties I'm looking at are in a third location and I would say B/B-.
Sorry - not a spreadsheet nerd :) But I'll share what we did. We took out a mortgage on a cheaper property (75K) and wish we didn't. It was at a higher rate than you list - but now we want the cash flow so we are paying it off in the next few weeks. The bank headaches were a real pain and we should have just bought it outright to begin with. If we did it again - we'd save and do the work to get mortgages for more expensive properties. Often you are limited on how many loans you can have (it was 4 in our case).
Thanks for your thoughts! Do you think the bank process was more onerous than any other mortgage?
I'm not at four mortgages yet but I have thought of it for the future if I decide I would like to pick up a few of these little guys. I know Fannie Mae offers a 5-10 mortgage program but I haven't spoken with lenders about it so I don't know how many offer it.
edit: got squiggly about real # on the interwebz