Looking To Purchase First Duplex

[Joseph T.]

Hello Everyone,

This is my first post on BP. I currently rent in the Philadelphia area and am looking to buy a multi-family home to occupy myself and also rent the other unit(s). 

I am having trouble finding properties that even come close to generating positive cash flow after PITI and a 50% rental income maintenance factor. Also having trouble finding properties that meet the >10% rule of yearly rental income divided by purchase price. To be honest I'm flexible in not having positive cash flow because I'd plan to live there and no longer paying rent already puts me $900/month ahead while not even considering the equity being built.

I'm looking in the Philly suburb areas at homes around the 250k mark (which is where it seems you need to be for something decent) and it seems the average rents for nice 3br/1.5bath are only about 1500/month. With a 15 year loan and 10% down that's far from positive cash flow.

Am I looking at this all wrong? Should I be looking at a 30 year loan that would lower my P&I payments to increase cash flow? Should I find a cheaper house with similar or higher rental rates? I really want to do this but initially it seems like the numbers won't work out. 

Notes: I can afford 10% down but wouldn't want to go much higher because that would wipe out a significant portion of my savings. My credit is very good. My idea was to look for a duplex with a smaller (1br/1bath) unit I would live in and a bigger unit to rent (I don't need much space because I'm a younger, single guy). This would be just the initial step in REI for me. Eventually I'd like to continue buying rental properties with a buy&hold strategy after getting my feet wet.

Any advice for the situation I've described above?