My calculations show that the property generates a negative cash flow of around $4600. While the $850 can probably cover the mortgage itself, it does not cover the HOA, property taxes, insurance.
The tax depreciation for the property helps alleviate the bleeding somewhat by the owner being able to get back around $3.5k in taxes, but that still leaves the owner with a negative cash flow of around $1k.
At the cost of $122k, the numbers look better, allowing the property to break even (when you take the taxes into consideration).
