Bad Advise From My Realtor?

[Brice Aldrich]

Hey everyone! I'm an aspiring investor who is looking to finally pull the trigger on a duplex as a house hack under FHA. I've been on the market looking for one in my area for quite some time, and I found one recently that interests me. Most of the multi-unit homes in Fort Wayne Indiana seem to be in low-income/high crime areas; because I'm planning on moving my wife with me, I don't feel that moving to these areas is a good option.

Recently I found a duplex in a safe, middle class, part of Fort Wayne. I contacted my realtor to schedule an appointment to see the property. I am under contract to use this realtor for my next purchase. The contract basically says if I use a different realtor, I owe him $1,200 for wasting his time. When I signed this contract I was not fully educated on what type of realtor I was looking for, big mistake. Turns out, this realtor is not an investor's realtor by any means. In fact, all of his advise contradicts almost everything I've learned from reading bigger pockets investment books, along with many others. 

My realtor and I walked through the duplex today, and in my opinion it turned out to be a great property. The property was originally listed on the market for $119,900.00. My realtor said the duplexes in the area do not have any recorded selling history, so I'm basically using my dumb uncle Zillow as a pricing guide. Zillow estimated the duplexes in the area (all almost identical to the one I'm looking at) at about $100k - $110k. The duplex I am looking at dropped its price to $109,900.00, and recently dropped again to $99,900.00. 

From reading "The Book on Rental Property Investing" by Brandon Turner, and "The Millionaire Real Estate Investor" by Gary Keller, both say when looking for a rental property you should try to get the property for 80% of the market value. This gives you built in equity and ensures positive cash-flow. Both books say that you need to set your investing criteria and stick to it. 

The duplex I found meets my criteria, and I would like to make an offer for 80% of the market value (which I'm saying is 100k). My realtor, who had excellent reviews and credibility online, says that he wouldn't offer anything below 6% of the asking price. By offering below he says you'll offend the seller, and they might not want to work with you. 

I told my realtor my goal was to have built in equity into the property and refinance in 6 months to pull the equity out for another investment. He told me that this hardly ever happens anymore and can't be done like times before 2008. He had little faith in my strategy and it started to make me second guess myself. Is this refinancing strategy still plausible today?

The property has all units rented, each renting for $650 a month (similar units rent for $730) for a gross of $1,300 a month. By running the 1%-2% rule ($1,300/$99,900) this give me 1.3% at their asking price. Since I will be living in one unit, my total gross rent will be $7200. This with a cash on cash return is ($7200/$4000, my downpayment) is 180%. 

My question is should I listen to my realtors advise? I want to offer between $75,000 - $80,000, the seller pays closing costs, and a contingency clause that says if something comes up under inspection I can retract my offer. It's worth noting, Fort Wayne is a sellers market for single-family homes, but I've read a lot of times when this happens the opposite holds true for multi-units. 

I'm 21 years old, and am full heatedly wanting to become an investor to leave my software job that I'm depressed at. I'm taking the real estate pre-licensing course so I can become my own realtor in the future. 

Thanks in advance for your thoughts!