Duplex Owner Occupied where other side's rent is low

[Alexander Lubczyk]

I'm interested in moving into my first owned property however, i have noticed the selling price for many of the duplexes in my area run higher than the total rent income from both sides being filled out. I intend to find one where I can owner occupy one half (FHA loan 4.5% interest rate) and inherit the current lessee from the other half of the property. Example, property sold for $210,000 with tenant paying $725 on the other side. My total loan would come out to $1750 a month after everything included. This would cause me to pay $1025 to cover the mortgage while living on the other side. Does a duplex investment like this make sense financially? I don't mind the $1025 payment as my job pays great (70k) in DFW area and allows myself flexibility, however would this eventually become a losing situation if i intend to eventually move up to another duplex after 2+ years as owner occupied? I believe I could get a higher paying tenant eventually on the existing side to meet the 1% rule, but is it worth it to eat the difference in the meantime if I can secure a newish (2000+) duplex with solid foundation, roofing, and decent interiors? Or am I ending up in a negative return on investment?

[Bjorn Ahlblad]

@Alexander Lubczyk Welcome to BP! Every investor has to decide for themselves what their objectives are, why they are doing it and what they expect as a return. There is not enough present value or upside in what you are describing in that scenario, and you pointed that out very well by your calculations. I would keep looking and perhaps look for a few more doors. It is difficult to make duplexes work if the per door price is too high. And don't count on eventually, if it does not work today it could get worse tomorrow especially in a high market. All the best!