House Hack vs SFH - Help me analyze

[Jesse Wolf]

Hi BP,

I'm currently relocating for work, and my options are to purchase a SFH from the company I work for (home builder, no discount) or to purchase a duplex and house hack.

Either property I purchase will be turned into a full time rental after the 12 months have elapsed.

SFH - $444,900 - 

4BR/2.5 Bath 2175 sq ft - Current market would rent it from 2300-2600. Mortgage would be $2,300 a month with $21,000 out of pocket

Pros - Brand new (build finishes 12/1), very close to work, 3 minutes from gym (I gym 5 days a week. This'll save me 2 hours a week in travel time). Decent school system, fantastic location. I am personally excited at the idea of living in the location because of the convenience of how close everything is.

Duplex - $550,000 - mortgage would be $3,030 FHA

Built- 2001

One side 2/2 1k sq ft, other side 3/2 1400sqft

2/2 side has had tenant since it was built in 2001. Tenant currently pays 1350/month. landlord pays utilities. Market rent is probably around 1650-1750. I'd have to raise the rent and flip utilities to tenant.

3/2 side will be vacated soon. Market rent for this unit is somewhere between 1850-2k.

Pros - Best school system in the greater surround area, backs up to 1million+ waterfront homes(yes, odd neighborhood. drove through it. very nice, not trashy at all)

-3/2 unit was renovated 2 years ago. Owner has kept up on maintenance and repairs overall

Concerns - It would be very awkward to tell a guy that's been living in the unit for almost 20 years that I'm jacking his rent up $500/month. If he vacates, would obviously need some updating/renovation. I also don't like the idea of the hostility of living next to someone I just increased their rent by $500

-An identical unit down the street sold earlier this year for $469,000 in February. I feel like I'm drastically overpaying, especially with the consideration about having to potentially renovate the 2/2 unit

Summary: Moving into the 3/2 unit and increasing the rent to 1750 on the 2/2 side would put my monthly mortgage portion around $1400/month. This is about 1k cheaper than going the SFH option saving me around 12k after tax money this next year. Long term I'd have the added benefit of being able to increase the rental rates of two units with the duplex vs the one with the SFH.

The other side is the location of the SFH is so great I fear the appreciation may far outweigh what I'll get on the duplex over the next 5-10 years. Seeing as WA market is highly appreciation based, that weighs heavily on my decision as well.

Any insight to be offered would be much appreciated.

Edit, footnote: I'm buying one of the very first houses in the neighborhood for the SFH. Anyone that's been involved in new home sales knows we creep the prices up a bit every quarter, or faster depending on how quickly we're selling. This bodes well for the appreciation argument as well.