Multi Family Duplex: Buying Negative for the Long Term Positive

[Daniel Sabato]

This is my first post on here! Big day, anyway I've got a discussion topic that I was hoping to receive some feedback on. This is the Long story short version without MANY details. I'd also like to mention I'm not asking for answers! Just opinions and discussions! Felt like this would be a good topic for many people!

I've come across a multi-family duplex that I'm interested in purchasing. I don't love the price but it's reasonable. If so,  I would plan to go the owner-occupant route, and probably put down 3-5%. Being that I've got to live in the one unit, my cash flow for the first year, or lack there of, would be terrible. I would end up losing about $9,000 after it is all said and done. That includes everything outside of utilities of course so essentially $9,000 for me to live there. I've also factored in repairs, vacancies, insurance, mortgage etc, Just didn't want to list them all. What intrigues me, is that after the year is up, assuming I can successfully rent out both units (Plenty of what if's and assumptions here) , my cash flow would shoot through the roof, 45% cash on cash return to be exact. I'm making assumptions about rent prices and an array of other things for the sake of this discussion. I'm well aware there's plenty more to consider and calculate of course.

Has anyone ever engaged in a situation like this? Personally, it doesn't sit well with me. I don't like the idea of losing money for a year and it basically goes against all my rules of investing. But the upside is what intrigues me and I live in area with really good access to NYC and has a super low vacancy rate so I'm confident it will rent after I move out. Any feedback and info is more than appreciated.