Finalizing duplex-help with longterm outlook/cashflow/risk

[Derrick Carter]

Hello,

New to forum and desperately loooking for some feedback as a new investor.

Wife and I have a purchase contract for a duplex in Asheville, NC.  Purchase price 757k.  Loan we have signed is allowing $0 down through local credit union, interest rate 5.75 Monthly payment will be around 4600-5000 with P&I and insurance/taxes.  I've tried to crunch the numbers but my head is spinning a bit.

We plan to rent out the lower part of the duplex and live in the other. rent should be between 2000 to 2600 for the one unit ( 2bed/2ba), highly likely 2200 to 2300 using comps.  We already own another property that we will rent for roughly 600$ cashflow monthly, much cheaper and lower interest rate. 

We are looking at this as a long term investment.  My question is say we eventually rent out both units for around the price of the whole unit ( 4600-5000 ).  We make a combine 210k a year and likely to increase and will move back into our lower cost current home.  Does the outlook of owning the duplex for 10-15-20 yrs at a near break even point make sense as a long term payoff?  Asheville, NC is one of the fastest growing areas and this place is in a PRIME location.  Thanks and sorry for the length

[Ryan Howell]

I would say this depends a lot on your goals.  If you analyze this as a rental without you living there, it is definitely cash flow negative and barely covers the mortgage.  I'm assuming at this price, you are in W Asheville or Montford.  I do think these areas are great for long term appreciation, which it sounds like you are banking on, but if they are older homes you may have high repairs to budget for.  That said, I would not pay for a negative cash flowing rental, even in the best areas of AVL and bank only on appreciation.

Now, as a house-hack, I look at this differently.  I would compare the risk vs not house-hacking.  You are getting twice the house for effectively the same mortgage (factoring in the rent to offset).  If you really want to live in this area and this is a lower risk way to do that, then go for it.