Can you all help me evaluate the numbers on this property? Am I doing this right?

Purchase price net 143K (after seller assist). Bought with 5% down. Loan 139K, 4.25%, 30 years fixed. Risky but it was a builder foreclosure and about 15% below market value at time of purchase.

Expenses:

Loan (P&I): 687

Annual taxes: $2100, Insurance: $650

Total monthly PITI: $944

Market Rent: $1225

Monthly Operating Costs (we'd cover WSG):

Water: 15

Sewer: 35

Garbage: 20

HOA: $25 (includes all exterior landscaping and landscaping water - middle unit townhome)

Maintenance Fund (8% gross rent): $98

Updates Fund (8% gross rent): $98

Vacancy reserve: (8% gross rent): $98

Effective monthly cash flow: 1225-1333 = -$108

Monthly loan principal pay down at point of conversion $313.

Effective annual profit: 313+(-108)= 205*12 = $2,460

This is for year 1. Of course the spread gets better as the paydown proceeds and market rents inflate. It was new construction, but primarily builder's grade materials.

So while the effective cash flow is negative to our bank account after setting aside reserves initially, the net effect even in year one is positive profitability.

Annual income ~190K, 25% FIT (effective 30 after child credit phase out).

The alternative would be to sell this property and use proceeds to reduce mortgage on a new primary residence but even at a 5% fixed 30 year mortgage the increase in DP would only save us about $55 on our monthly PITI on the primary residence. We can definitely afford to float a negative cash flow (if any in "real" dollars) as our income to expense ratio is pretty high. We are maxing 401Ks. This would be for diversification purposes.

Any recommended reads if this is not enough information?