Duplex home purchase. 1% rule not met. Should I do it?

[Bob Dole]

Hello everyone. Thanks for you advice in advance. I own 1/2 of a duplex home (2 bed/2.5 bath) and my neighbor is selling his half (2 bed/1.5 bath). I live in a trendy part of Indianapolis downtown and the rent is projected to be $2000 to 2200. I owe 160,000 on my mortgage (240000 purchase price) and I pay 1325.00 monthly for the last 5 years. My neighbor wants to sell for 300000. I have enough to cover the 20% down. The monthly costs of the mortgage, insurance and interest would be about 1650.00. This, of course, doesn't meet the 1% rule but there alot of intangible benefits in this case. I get to choose or change my neighbor and I would own the whole property including the off street parking. There is no more room to build in this neighborhood and it is a block away from all the restaurants, bars, sports arenas and galleries in Indy. I would like to go for it but I'm afraid of potentially making a mistake from the financial perspective.

[John K.]

I usually avoid duplexes if they don't hit the 1% rule, it's the very first thing I look at.  However since you live in the other half, so you could control your neighbor it may be worth it from a piece of mind angle, but not as a great investment.