Considering house hacking a duplex. Few questions

[Colton S.]

Am looking to buy my first house. Found a duplex for $550k with tenants paying $1100 on a month to month lease. Tenant that would be staying is expecting a rent increase. My question is about doing 3.5% down or 20% down. 

Option A - Put 3.5% down and pay $1800ish a month to live in one side of the duplex. Rent would not cover the mortgage if I happened to move out after the first year.

Option B - Put 20% down and pay $1200ish a month to live in one side of the duplex. Rent other unit out for $1300-$1400. Rent would cover the mortgage + $200ish extra a month if I moved and rented out both units. 

Option C - Wait for better opportunity or just buy a single family home and live there for the next 1-2 years then turn it into a rental when I move out. 

Is it common to have to put down 20% in order for a property to get close to cash flow? I have extra funds to cover a negative cash flowing property but am unsure if I want that with how high the market currently is. Trying not to count on appreciation being a factor.

[Jesse Thurston]

This is a tricky situation. I believe the reason you house hack is to take advantage of only putting in the 3.5% FHA loan down payment. You have to evaluate your options and see what makes sense for your situation. If this gets you into real estate and you can't find any other duplex's that make sense I personally would go for it. You're going to pay rent anyways so it makes sense to get started. If it saves you enough money to jump on another deal in the near future with only doing the that small down payment it makes sense. If you're okay with waiting for a while and are focused on your current numbers with cashflow put the 20 percent down.