Positive Cash Flow, What Are The Pitfalls?
I have found a 3bd/1ba house in Ohio (I am in California) for $11,000 and have received an estimate for repairs for $2,000. Comps are around $25,000. The market rent in this area is about $600 per month. This is obviously a positive cash-flow deal. I have someone that is willing to manage the property for 15% of rents (kind of high compared to my area) and someone that will be my handyman. What are the pitfalls? I have never owned anything that wasn't within driving distance and I've always managed my own properties, but it is hard to walk away from this one since positive cash-flow properties are so rare in my area.....and the price is less than my last car!
What are the negatives? How can I lose money on this one? 
The negatives of positive cash flow are that if you get too much, you will forget your roots. Seriously, I have never done that so I would suggest you have a minimum of five years experience in management of properties. I can just see you flying out to Ohio for one unit because your tennant says he paid and your manager says he is crazy. Meanwhile, they are cousins, and just figuring out how to frustrate you to the point that you sell them the property.
I would buy it cash and rent it to someone for $450, with the understanding that $150 per month goes towards them self managing and maintaining. Still positive!
[addsig]
For the past several years, Ohio has been seening a decline in heavy industry. Plants have been closing and moving overseas.
Depending upon the local economy, you may find that cheap house is no bargain when there aren't any renters because all the workers moved elsewhere to find other work.
Hi Shirley
Is the property manager a professional? I don't think I would get involved in that unless it was a reputable manager whom I knew would take care of my investment. I don't think I would go for ncsecor's idea either (sorry nc). Might work if the property is driving distance, but right accross the country, just because you're discounting the rent for the tenant to self manage doesn't mean to say they truly are. I repeat myself, but I feel that a professional property manager is the only way to go.
Also, my calculation may be off (it is late) but that rent seems pretty high vs the value of the property.
We also live in CA and own a small apartment building in Omaha, NE. Right after we closed and flew home pleased with our investment one tenant upped and walked out without a trace (thankfully they didn't trash the place) and one locked himself in his room and refused to pay the rent (and had to be evicted). Man were we pleased we had a professional property manager taking care of that.
Good luck, it does sound like a good deal.
You are in my backyard. What part of Ohio is it in? That does seem rather inexpensive for a 3BR 1Ba with only $2000.00 cosmetic repair needed. I usually buy 25k-35k SFR and currently get $450- $475 per month. But for $13,000 all told... who cares. I too would only consider a professional property management company. You are too far away not to.
Congrats on what may be a great deal.
Good Luck,
Shawn(OH)
I second everyone's advice on hiring a professional property manager.
When I had rental property in Middletown, OH (halfway between Cinn and Dayton), I used a real estate broker who had an active property management business on the side. I am not always a proponent of part-time property managers, but this one worked well for me for several years.
Those numbers don't sound right to me. Usually when something sounds that good something is up. I have one guy who paid a similar price on a house just a few doors down from a property I own. He thought he was going to get $500 based on comps, but there is no way he will get over $350 on this block. He's been trying for at least 6 months.He also is from out of town and isn't familiar with individual streets in this town. Also, I have a friend who sold a house in Ohio this past year. His mortgage payment was $600 but he never was able to get more than $400 during the 2 years he was trying to sell it. I'm not sure what other expenses he incurred but he said it ended up costing him $20k to get out of the property.