My goal of purchasing two properties per year to use as rentals is under performing right now. I have made a few offers, but most properties aren't cash-flow positive with only 10% down.
Let's take for example, a $200,000 home (below median home value in Utah). If I were to pay 10% down I'll be financing $180k. At 7.5% (a normal non-owner occupied investment property rate), my 30 year fixed payment is $1259 which does not include taxes and escrow. A quick search of the MLS shows 4 homes listed exactly at $200k today and all of them are 3 bedroom. There are several pages of homes for rent that have 3 bedrooms in the Daily Herald and the price range is significant. The 20 that I looked at had rents from $700 to $1450, with an average price around $1100. This means I am $159 negative cash flow per month without considering escrow, vacancies, and repairs. If I go with an interest only loan, my payment would go down to $1125/month which in the end still means negative cash flow.
Utah has become a market where you have to get a really good deal on a property, or pay 20% or more down, before you can produce a positive cash flow.
~Happy Investing
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