First Duplex Decision (Need Opinions)

[Kyle Brown]

Hello,

I am close to purchasing my first duplex in South Jersey and am looking to see if anyone is or has been in the same situation.  It is a 2 unit 1 bedroom 1 bath each.  Unit 1 currently rents for $700/month, Unit 2 currently rents for $725/month.  There are minor repairs and definitely updates I would like to do, but no major issues. 

I will be purchasing this with FHA 3.5% down at about a 4% interest rate. It is listed at $132,900, but I will be making an offer around $107,000. The total monthly mortgage for the property including taxes and homeowners insurance is $1103.04/month. If my offer does get accepted, I will only be getting income from the one Unit 1 $700 for the first year, which will cause me to have a negative cash flow. I will be paying the balance which would be $403/month. Once the second year comes and I can rent out the second unit, I will be cash flow positive with $321.96/month.

I would most likely raise rent to $800 and $850 once all tenant contracts are up, but to be conservative, I used the current numbers.  My question is, is it worth it to suck up the negative cash flow for a year and have to put out the extra money to pay the mortgage for a long term positive cash flow duplex?