OK, so here's the run down. I have a family member who is looking to sell their second home. This is a single wide trailer 2/2, where they own the 1/6th of an acre of land, in central Florida. Purchase price would be around 20K. Similar trailers rent for around $650 per month in the area.
I'm thinking of purchasing it and renting it out as a side investment, using a property manager. So here's what I'm thinking number wise:
20K purchase
1K transfer taxes
1K cleaning / minor refurbs (its in good shape I was just in it recently)
---
22K all in
Annual Income/Expenses:
+$7150 -- ($650 x 11 months)
-$715 -- (Property Management)
-$715 -- (Assume 10% repair fund)
-$715 -- (Roughly 10% taxes and insurance)
$5005 - Net Annual Income
25% annual return
So, unless I'm wildly off base, this seems like a reasonable investment, even if I'm low on the expense side, or high on my anticipated rent side.
Also, purchasing this would be a big help to my family member. So, is this an insane idea or does it seem somewhat reasonable?
Edit - We would do this with cash, and can easily afford to do this if it matters in the calculation.