Should I consider owner-occupied duplex with little cashflow?

[Jessie Niu]

A newbie's dilemma: I am looking for an owner-occupied duplex, but the ones in the area that’s suitable for us to live are just not producing enough cashflows (the mortgage is a lot higher etc). The # on cheaper ones make so much more sense, but I don’t want to live in those areas. I feel that I am over-paying for owner-occupied duplex for the investment purpose, yes I can live on one side and have part of my living cost paid by the tenant, but what happens after I move out?

I did deal analysis at BP, only less than $100 positive cashflow, cap rate 5.3%, the rent definitely doesn’t meet the 2% rule, actually only 0.95%. I can get the same rent with a duplex that’s almost 50~60k less, but the area is not as decent. Should I make compromise due to owner-occupancy?

[Andrew Syrios]

I would forget about the 2% rule first of all, it's not a very good tool. I'm assuming the deal analysis you did was if you rented both sides. It looks pretty tight to me. If it's somewhere you really want to live, that's one thing. But I think you want to look for a motivated seller or something like that where you can get a better deal.