Buying a Owner Occupied Duplex, 0% Down, VA Loan

[Sheen F.]

Hi everyone,

My wife and I are buying a duplex (420k) - this will be our first home. I qualify for a VA loan and am exempt from the funding fee. The monthly income is currently $3000 (upper is rented at $1700, lower at $1300 ). Coincidentally, we pay $1700 at our current apartment). We are going to occupy the upper unit, as it's the one that meets our personal needs better. After a couple of years we plan to move into a single family home.

The duplex is in a great, in demand, area: one of the hotter areas of the city, near a lot of craft breweries, restaurants, art galleries, etc. However, we're planning on having kids in a year or two and would prefer to be in a single family home to raise them.

We have the money for 20% down, but prefer not to put cash in, since we don't have to. Putting money down would increase cash flow a bit, but would reduce the cash on cash ROI. Plus, we'd rather save that cash a single family home.

For 2017, with the current rent and expenses (using the Rental Calculator, so we did factor in vacancy rate, maintenance, cap expenditures, etc, and a 3% increases in income and 3% costs) it would produce no cashflow. Next year (2018), the annual cash flow would be $550; 2019: $1300; 2020: $2000.

Considering that we'd have put virtually no cash into this - other than covering about $1700/month for the year or two that we live there - our cash on cash ROI is huge.

Am I analyzing this right? Is this a good opportunity?

Thanks! I'd appreciate any insight or experiences you guys can share. We're new to this, but excited to learn.