Two Deals Go In..One Comes Out! Which one should I choose?!

[Brandyn Dietman]

I need some help from my friends!!

I found two great properties in Milwaukee, WI, where I live, and am putting in an offer on one today(hopefully)! They are next to total opposites, apples and oranges, and I need help if you could lend an opinion! I will be living in one of the units at either property, both are in safe neighborhoods with the same quality of school district, and will not receive more rent if I put remodeling into them. I used the same 6% vacancy,10% CAPEX, 10% Mgt, and 8% repair figures as both owners declined to provide actual numbers.. I do have a regular full time job, so this will be my part time side job.

Property #1

Price: $135,000 asking price about $1700 in rent.

Expected Purchase Price: $125,000

Financing: 5% Conventional (due to state of the garage and peeling paint)

Monthly expenses: $1742

Cash Flow at asking price:-$42

Pros:

Duplex/1 bedroom cottage = Privacy in own unit

On Double lot so lots of room

Good Tenants (1-15 years other two are 2 years)

Next to work (5 minute drive)

Blue collar, B class neighborhood

Lots of parking

Cons:

Garage needs to be torn down

Back cottage needs a new roof soonish (has 3 layers on it now, next 2-3 years will need a roof)

Might be hard to re-rent if I get vacancy

Not a whole lot to do in area

Property #2

Price: $279,000 asking price about $2550 in rent.

Expected Price: $255,000

Financing: VA 0% down!

Monthly expenses: $2696

Cash Flow at asking price:-$146

Pros:

Mostly remolded

Great rents

Looks well taken care of

Not bad commute to work (13 minutes)

Very sought after neighborhood

Fenced in back yard

Cons:

Pretty small units

Frequent turnover in tenants

Minimal off street parking

Older house (1875ish)

I do like both properties, and I do have Property Mgt built into both even though I'll be doing it myself. I did it just in case I get deployed, I am expecting the expense.  My big worry is that this is my first property, and I don't want to max out my available financing right off the bat, or, is it worth it for the property?  My main plan is to live in one of the units until I have enough capital to move onto the next property, hopefully in the next 2 years. All opinions welcome!