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.

[Brandon Griffin]

Thank you for your service.

There are a couple things you didn't mention.  Specifically property taxes, insurance, and property management.  Also what kind of condition is the building in?  How old is the roof, water heaters...

But generally speaking, I think this can work.