Looking to buy first duplex

[Josh Joly]

I'm just starting out and looking to buy my first duplex, with the goal of cash flow and financial freedom one day. I would line in half and rent out the other. The asking price is $179k. Doesn't really need any major work. It wouldn't be cash flow positive with just renting out one side, but would pay about 75% of my mortgage. Is this okay to do? I'm looking to invest for the future and possibly rent out both sides eventually and move on to another investment. Any help/thoughts would be appreciated. Thanks for looking!

[Kevin Hunter]

@Josh Joly, if you are living in a property for free or close to free than I think it is a win.  Full transparency, I don't know the Deltona, FL market.  However, if you can live in a duplex for a small amount each month when it should cost you something much greater than that, than it is a good deal.  When I say the numbers, I am talking about all the other fees you will pay each month.  You have to calculate in maintenance and repairs, about 10% per month, vacancy, about 10% per month, capital expenses, about 10% per month, and then various other fees.  Some counties or cities require landlords to pay certain utilities, for example.  Snow removal, landscaping, etc...

Making some assumptions, a 162K mortgage, after a 10% down payment, with a 4% interest rate is going to cost you PITI of $773 each month. 75% of that $773 is $193 per month. If you are paying $193 each month in rent, and the comparable rent in the area is $850, then that is a decent deal. The reason I say that is because $193 plus the expenses I mentioned above, equals about $500 per month. However, if comparable rents for a duplex are only $500 a month then you are likely losing money.

As long as you are taking all of those things into account, and you are still living for a couple of hundred dollars a month, then I think you are making a sound investment.