First Duplex a bad idea?

[Luke Franklin]

After two unsuccessful attempts to buy a SFH (outbid on short sale and HUD home), I'm looking at a duplex to live in half and rent half. I know nothing about real estate and was directed to BP by a friend. I like the idea of the duplex because compared to SFH it actually has value beyond appreciation, but after hearing the rules and seeing #s on BP i'm questioning my decision to pursue this duplex. It will have to be 3.5% and FHA because I don't have 20% for a multifamily.

The Numbers

Price: $155,000

- Interest & Principle $748
- Mortgage Insurance $166
- Home insurance $66
- Taxes $405 = $1388 4.25% Rate

Rental income is only $800 per month on one side right now. I'll be living in the other. I'm confident I can get this to $1000 as I research the area. The current tenet is month to month and hasn't had a rent increase since November 2009. The location is very good. Mostly residential in a area close enough to Chicago to grab commuters who feel they're getting a steal by coming south.

I want to live there for a 2-3 years and then move on and rent both sides. I thought it was a good opportunity compared to just buying a home to live in with no investment strategy, but wow I think I'm gonna get raked over the coals compared to the deals I'm seeing on BP.

Is this a good idea? Keep in mind I can cover the mortgage, insurances and taxes fairly comfortably on my salary if necessary. There are NO other duplexes selling in the area (rents are high now). I want to make a smart decision, but am afraid I'm making a buy for the sake of making a buy.