HELP with analyzing a potential deal please!

[Andrew Rickli]

Hi all, 

I am looking at two properties to do an owner-occupied duplex. I need help deciding which house will be the better buy. I am a commerical banker but this is my first investment purchase. 

I am using an in house mortgage that we have, 97% LTV, no PMI, 4% fixed for 30 or 3.5% 7/1 ARM.

House #1--listed for roughly $169k (3 bed, 1.5 bath on each side). 

House #2--listed for roughly $150k (3 bed, 1.5 on each side). 

House #1 is a brick house in a quiet neighborhood in MD (next to a round-about), with 4 on street parking spaces, and room in the back, only grade is out front. Its currently vacant on both sides. It was previously used to house mentally challenged individuals in the county when it was owned by the agency. The realtor said that the PGI is min. $1,000/month for each unit or $24k/year. 

House #2 is a panel sided house that is renovated, in a downtown market of WV (lower income area), with only 2 street spaces, and a full yard in the back. It is currently rented on one side for $925/month for 2 years by the owners warehouse manager. The tenant has been there for 10 years. 

House #1 taxes/year roughly $3k

House #2 taxes/year roughly $1.5k

House #1 has a nicer neighborhood, better tenant pool potential, and higher rent potential to go along with a higher chance of appreciation. 

House #2 is in a lesser neighborhood, lower income tenant potential, with lower chance of appreciation BUT the tenants currently there have been there for 10 years. I can get this one and have tenants in there on day #1. 

What do you think is the best play? I know I haven't broken out expenses yet, but wanted to get a feel based on these factors. 

Thanks all!!