Buying a Duplex w/3.5% Down

[Cameron Sume]

I'm looking to start my investment journey by purchasing a duplex, living in one side and renting out the other. I only have enough for an FHA loan which requires a 3.5% down payment. I'm having a hard time finding places that will provide a positive cash flow. Does anyone have any advice or experience with this?

Here are some numbers to let you know what I’m working with:

Mortgage - $3,400 per month

Rent - $1,800 per unit

This leaves about a $200 revenue but does not take into consideration all of the expenses etc.

Clearly, this is a bad deal as it would create a negative cash flow. But I was wondering if we should continue to pursue the 3.5% down option and bite the bullet for a few years until we can refinance the loan or if we should start to save enough for a conventional loan (20% down). And advice helps, thanks!

[David Lee Hall, III]

@Cameron Sume

@Jason Hartmann always preaches that real estate is a multidimensional universe. Cash flow is one metric. You get depreciation which lowers your tax burden. You get appreciation which lets you pull out more money in the future. Finally you get equity which allows you leverage.

If this is your primary residence you also get to live for about half the going rate per your numbers.

You may want to factor in some of these other areas before making a decision.